Why a Louisiana tax credit program supporting angel investors makes sense
A Louisiana tax credit program supporting angel investors as well as research and development programs is an example of public policy that props up growth-oriented firms likely to have an economic impact, Governing magazine reports.
“Those are programs that make a lot of sense because they help the kind of firms that we want to grow and that could create a lot of jobs,” says Robert Atkinson, economist and president of the Information Technology and Innovation Foundation, a Washington D.C.-based think tank.
Atkinson and economist Michael Ling are the authors of the new book Big is Beautiful: Debunking the Myth of Small Business, which makes the somewhat unpopular argument that small businesses are not economic engines because they don’t attract new money into a region or create high-quality jobs.
While nearly half of the private-sector workforce is employed by small businesses, Atkinson tells Governing that larger businesses, on average, pay 54% higher wages, lay off workers less, are more unionized and offer better benefits. Atkinson and Lind’s research also indicates that states with a higher share of small businesses tend to have a lower average income.
Public policy should support and encourage startups that have the potential to scale up into larger businesses, they say. That means focusing on tech startups instead of giving government aid to mom and pop businesses that have a minimal economic impact.
