Legislators Should Act to Create Jobs Here

Jason R. Smith wrote an opinion article for the Journal Sentinel in Wisconsin discussing his reasons for supporting the CAPCO program:

The venture capital industry is misunderstood and misperceived. While some think of the industry as a bunch of youngsters playing fast and loose with ideas and millions of dollars, venture capitalists have, in fact, created some of the world’s giant job creators – companies such as Microsoft, Amazon, Facebook and Apple.

As a Wisconsin native from Superior, I have witnessed the devastating impact of the exporting of jobs from a city that once prospered from the mining, railroad and shipping industries. As these jobs began to disappear over the last quarter-century, the population of the city declined as well. And my hometown is not an anomaly; instead, it is a microcosm of what is happening all across Wisconsin.

Wisconsin now has an opportunity to reverse that trajectory as the Legislature contemplates the Wisconsin Jobs Act and the role that venture capitalists play in it. If we do this right, we can spark growth and the jobs that come with it.

The Wisconsin Technology Council analyzed Wisconsin’s technology industries and concluded that while Wisconsin generates more patents and more academic research spending per capita than several other peer states, it receives about one-half of 1% of the nation’s venture capital.

Why is that important?

Because venture-backed companies increase sales twice as fast as other companies and create jobs eight times faster than non-venture backed companies. (See www.nvca.org/”>www.nvca.org.)

If Wisconsin received its proportional share of the nation’s venture capital, it would mean an additional 259,215 jobs in the state (see www.wisconsintechnologycouncil.com/publications). And because the average salary of a venture-backed company is $68,000, that would result in an additional $1.23 billion a year in Wisconsin income tax. That’s without counting ancillary jobs created from supplying and servicing these companies or the sales taxes and property taxes paid by these Wisconsin workers.

So here we are: The state of Wisconsin and the country is in the midst of the greatest economic recession since the Great Depression, and we need to create jobs. Last spring, the Legislature took up the Wisconsin Jobs Act, which received support from the venture industry as a whole and the Wisconsin Technology Council. That bill was tabled as a result of concern over the use of insurance tax credit funding in a portion of the bill.

I understand that the political climate has been less than cordial to say the least, but we are talking about new jobs. That part of the bill was called a “CAPCO” – an acronym for “certified capital companies” – and it encouraged insurance companies to invest some of their money here in Wisconsin rather than, for instance, buying Treasury bills from Goldman Sachs in New York.

The question I have is: Why not provide a way for those insurance companies that collect our premiums every month to invest that money right back into creating Wisconsin jobs? I know that back in 1999, one of the funds involved in that program did not act appropriately, but the two other funds in the CAPCO program created thousands of jobs in Wisconsin companies that are still thriving today. I believe the state should not throw out the baby with the bath water. Rather, it should pass laws that eliminate waste and abuse and promote success.

We have the opportunity to create our own economic development tool that learns from past success and failure and brings us into the future – a tool that is fast, certain to provide investment into Wisconsin and is budget neutral.

For five months, the Wisconsin Jobs Act has been on hold as groups have fought over who gets the bigger piece of the pie. The time has come to compromise before it is too late and the jobs bill becomes just another memory. As co-sponsor of the bipartisan bill, Rep. Jason Fields (D-Milwaukee), stated at a news conference this spring: “The greatest economic development program a person can receive is a job.”

I agree. Let’s get to work.

Read the original article on JSOnline.