A potentially costly and controversial investment law that was killed seven years ago appears to have wandered off the set of “The Walking Dead” and back into the state Legislature.
In 2004 lawmakers buried the program to funnel $75 million in tax credits through investment companies to small businesses before it could grow. Now a new Legislature has decided to bring it back, and this time it would cost taxpayers as much as $125 million. In addition, some of the legislators who lined up to repeal the law in 2004 are the ones reviving it. …
Proponents of the bill argue it would provide the money needed to help companies expand and create jobs. Opponents say that — as with the previous law — the new measure will simply hand piles of taxpayer money over to a few investment firms, which will reap most of the benefit.
Here’s how the current proposal would work: SB 203 would clear the way for “certified capital companies,” called CAPCOs, to operate in Georgia. These are private venture capital companies, several of which already operate in other states. Under SB 203, the state’s insurance companies would receive tax breaks to invest in CAPCOs. The CAPCOs would, in turn, invest in small businesses and startups across the state, enabling them to grow and create jobs. CAPCOs eventually wind up with the principal invested and any profit.
Under the other idea we’ve discussed, at least the state would be an equity partner in the investments and taxpayers might recoup some gains (however, there are many caveats at play there; please read the earlier piece if you haven’t already). The CAPCO is simply a give-away, with only a promise that some jobs, somewhere, some day, might be created.
But because of the way the Legislature works, the bill — which passed the House last year without much fanfare, perhaps because a lot of House members didn’t realize what they were voting for — could make it through the General Assembly far too easily.
Senate leaders need to make sure it is killed when they return next month. If not, Gov. Nathan Deal needs to veto the bill. Tea party members, this is your cue to call your legislators, particularly in the state Senate.
This is not conservatism. It’s not about promoting the free market. It’s corporate welfare, and it needs to die on the vine.
– By Kyle Wingfield