Sen. Kyle D. Loveless (R-Oklahoma City) and Rep. Jon Echols (R-Oklahoma City) have introduced legislation to spark a new wave of investment in Oklahoma-based start-up companies.
SB 412 allows an investor in a qualified, Oklahoma-based start-up company to offset some of the tax liability on their return should the investment be profitable. The bill, known as the Ignite Oklahoma Act, requires the investment be made in a new start-up company with limited capital and be primarily housed in Oklahoma. If the company is profitable, the investor is able to apply the tax credit to off-set up to 55% of the tax liability generated from that specific investment.
“I am always looking for ways to help companies succeed in order to grow our economy and provide good-paying jobs for Oklahomans,” Loveless said. “The passage of this legislation will be a first step in helping infuse Oklahoma’s startup community with better cash flow.”
The Ignite program differs from those in the past because the credit is redeemable on the back end of the investment; once measurable economic growth has positively impacted the economy. If the company fails, the investor is unable to use the credit because the investment generated no tax liability. Additionally, this credit can only be used against tax liability directly related to the investment, not against any other.
“Creating an environment to support start-up businesses is not only important to the growth of our economy, it’s essential for its health,” said Echols, who serves as the House majority floor leader. “Oklahoma is no stranger to tough economic times, especially when there is a downturn in oil and gas production. We need programs like this to help diversify our economy.”
SB 412 has received support from the business community.
“I see this as one step toward a land run of entrepreneurs in Oklahoma,” said David Lewis, an Oklahoma City-based business leader who has backed five Oklahoma start-ups. “Attracting start-ups to the state is the most effective way to create a more dynamic and stable economy.”
Oklahoma ranked 46th in the country for innovation potential in 2016 according to WalletHub. This ranking is due in large part to limited venture-capital funding and entrepreneurial activity.
“We have seen several successful new medical devices developed right here in Oklahoma,” said Dr. Joel Thomas, an Oklahoma neuroradiologist. “The Ignite plan will help expand that progress and allow our state’s economy to continue to benefit from the innovative minds of entrepreneurs.”
The legislative session began Monday, Feb. 6.