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Tax credit bill aims to boost high-growth businesses in S.C.

Staff Report
Published Jan. 18, 2013

State Sen. Hugh Leatherman, R-Florence, introduced Thursday a bill that aims to use tax credits as incentives to encourage individual angel investors to invest in early stage, high-growth businesses and to support businesses seeking to commercialize technology invented at the state's universities.

The proposed bill, High Growth Small Business Job Creation Act of 2013, would apply to businesses in manufacturing, processing, warehousing, wholesaling, software development, information technology services, and research and development, among other services.

The bill was referred to the Senate Finance Committee, which Leatherman chairs.

Leatherman’s bill would limit the total amount of credits in a single year for all taxpayers to $5 million.

The amount of tax credits allowed to a single taxpayer in one year is $100,000. And the amount of the tax credit to an individual in one year cannot exceed that taxpayer’s tax liability. An unused credit is allowed to be carried forward for 10 years.

A study in 2011 by the Darla Moore School of Business at the University of South Carolina asserted that the solution to job growth may lie with local, high-impact firms.

These enterprises are considered high-impact because they register strong sales growth and are headquartered in South Carolina, the study said.

The study, conducted by economists in the school’s Division of Research, found that local, high-impact firms accounted for only 2.7% of private-sector firms in South Carolina, but contributed 66.8% of all net employment gains. The study also found that small firms, those with fewer than 20 employees, account for 26% of all firms in South Carolina, but 51% of all net job generation.

“For years, it has been widely believed that small businesses create nearly all the jobs in the United States. However, recent research suggests something different,” said Doug Woodward, economics professor and director of the research division. “New data indicate that it’s actually a small number of fast-growing, locally based small and medium companies that are responsible for the majority of U.S. employment gains.”