New Mexico Angel Tax Credit has proven successful
The New Mexico Angel Tax Credit is a thing proven by experience to work in New Mexico — a fact that we should all celebrate. Read on and light up those Matanza fires.
Formulated and led by former Rep. Jane Powdrell-Cuthbert, the New Mexico Angel Tax Credit passed into law in 2007. She had set out to attract more private capital into start-up businesses, a risky yet essential economic development sector of the economy while also making money for New Mexico. The Tax Credit continues to accomplish her goals by functioning as a public inducement by the state for the investment of private money in high potential but, alas, as start-up and early-stage companies, high-risk enterprises.
How the New Mexico Angel Tax Credit works:
When a New Mexico citizen invests up to $250,000 in a company that the New Mexico Taxation and Revenue Department certifies as a qualifying Angel investment, the investor qualifies for a tax credit of 25% of the investment, or $62,500 on that $250,000. The tax credit allows the investor to offset their qualifying investment from their New Mexico tax bills. More details on the Angel’s website.
This translates to a winning trifecta for New Mexico, our local companies and the participating private investors.
Data compiled by the Angel Capital Association reveals that the impact of $250,000 successfully deployed in Angel-qualified companies creates 12.5 jobs and $5.2 million of economic impact. Thus, for the State of New Mexico, $62,500 in tax credits granted to induce a $250,000 investment leads to a taxable and tax paying company with an economic impact that is 84 times the state’s tax incentive.
Since some Angel investments fail and others underachieve, and yet others are wonderfully successful, the program’s net benefit to the State is about 25-30 times the value of the tax incentives granted. That is a great number. Thus, too, for the investors, the tax credits are a big win as an incentive to make the investment. There are no losers except for non-participants.
What the New Mexico Angel Tax Credit has accomplished: It has supported the New Mexico Angels organization alone to fund more than 50 New Mexico companies launched and run by New Mexicans and created more than 1,000 high paying jobs. Not all participating investors are members of the New Mexico Angels — their investment and tax credit information is in addition to that cited herein. Examples of NM Angel funded companies that have recently leveraged the NM Angel Tax Credit Program include Electric Playhouse, Build with Robots,
BennuBio, Eagl Technology, Telemetry Insights, Taos Bakes in Questa, Ganymede Games in Las Cruces, UbiQd in Los Alamos and Parting Stone in Santa Fe (as seen on Shark Tank).
Please join me to support extending NM Angel Tax Credit legislation in the upcoming legislation session. This measure enjoys bi-partisan support, has the support of the governor’s office and is seen by many as positive return on investment to us taxpayers.
John Rice is the CEO at ASiQ, LLC. New Mexico Angels’ members, investors and start-up owners submit occasional columns on economic development and start-up opportunities in the state. The Angels unite individual investors to pool their resources, providing seed and earlystage capital to startup companies.