As Pandemic Derails Economy, Phillips Proposes Tax Relief For Startups To Spur Innovation
WASHINGTON, D.C. — This week, Rep. Dean Phillips (D-MN) introduced a bipartisan bill in the House of Representatives to provide tax relief to startups that are ineligible for other types of business aid passed by Congress in response to the COVID-19 pandemic. Phillips’s IGNITE American Innovation Act will allow small and mid-size businesses that weren’t able to utilize the CARES Act tax provisions to monetize up to $25 million accumulated tax assets. In addition, the bill will provide a bonus in tax assets generated by research and production of products that will prevent, diagnose, and treat COVID-19. Phillips is leading the bill with Congresswoman Jackie Walorski (R-IN).
“I've had the privilege of getting to know some extraordinary Minnesota innovators and entrepreneurs as a Congressman and over the course of my career in business," said Phillips. "Smaller startups and growth companies are unique business models and have to compete against large corporate incumbents - that's challenging under regular conditions, and even more so during this time of economic uncertainty. These businesses make up large share of new jobs, and we must do more to ensure we have an even playing field so that entrepreneurs and innovators can continue to provide opportunities for the next generation of American workers.”
Specifically, the bill would:
- Allow growth companies to monetize up to $100 million worth of accumulated net operating losses (NOLs) which were generated within the previous five years at the 21 percent corporate rate
- Double the value for NOLs generated by products to prevent, diagnose, or treat COVID-19.
- Allow growth companies to monetize R&D credits
- Double the value of R&D credits generated by research into products to prevent, diagnose, or treat COVID-19.
Rep. Phillips’s bill is already being praised by Minnesota and national innovators:
Medical Alley President and CEO Shaye Mandle
"We are grateful for U.S. Rep. Phillips’s continued leadership and advocacy for the health technology and care industry and small businesses located in Medical Alley”, said Shaye Mandle, President and CEO of the Medical Alley Association. “At a time when innovation in therapeutics and care delivery is desperately needed, patients throughout the country are fortunate to have U.S. Rep. Phillips working to ensure continued development of, and access to, these products.”
Center for American Entrepreneurship President John Dearie
“CAE applauds introduction of the IGNITE American Innovation Act and thanks Reps. Dean Phillips (D-MN) and Jackie Walorski (R-IN) for their leadership on this critical issue,” said John Dearie, president of the Center for American Entrepreneurship. “Research has consistently demonstrated that startups are disproportionately responsible for the innovations that drive economic growth and job creation. And, yet, the Covid19 emergency has imperiled an entire generation of young businesses, potentially crippling the post-crisis economic recovery. By helping to get badly needed capital to struggling startups, the IAIA makes a vital investment in America’s most innovative and promising young companies and, in turn, the U.S. economy’s capacity to sustain and recover from the Covid emergency.”
Mark Leahey, President and CEO of the Medical Device Manufacturers Association
“MDMA applauds Congressman Phillips and Congresswoman Walorski for their bipartisan leadership to provide support and resources for medical technology innovators who are passionately working to develop the cures and therapies of tomorrow. The COVID-19 pandemic continues to cause severe disruptions for countless innovators who are simply trying to keep their doors open and retain their workforce, and this legislation would provide some of the liquidity that is needed to help the medtech ecosystem. While we appreciate Congress’ unprecedented efforts to stabilize the economy, the existing liquidity programs are inaccessible for many emerging, fast growing companies. The top priorities in the United States today are to save lives, and to save jobs, and the ‘IGNITE American Innovation Act’ would go a long way towards accomplishing these critical goals.”
Advanced Medical Technology Association Executive Director Ashley Wittorf
"American medtech innovation is driven by small companies and start-ups on the cutting edge of improving patient care. In the best of times, these heavily R&D-focused firms struggle to find the financing and resources they need to navigate tough regulatory and reimbursement pathways in order to bring a new device or diagnostic to market, and that challenge has been magnified by the pandemic. The legislation introduced by Reps. Dean Phillips (D-Minn.) and Jackie Walorski (R-Ind.) will serve as vital lifeline to these small, entrepreneurial companies, allowing them to weather the current COVID-related economic downturn and continue developing the next-generation treatments and cures patients are waiting for."
TechNet President and CEO Linda Moore
"TechNet commends Reps. Phillips and Walorski for introducing the IGNITE American Innovation Act to provide relief to startups in the wake of COVID-19. This legislation will help startups access needed funds so they can continue to develop solutions for our country and create products that serve our nation during this unprecedented time. As it stands, startups have struggled due to being unintentionally shut out of federal economic relief and are lacking a crucial lifeline to weather the economic storm. Startups are rapid job creators and community builders that deserve the ability to use all relevant forms of capital to stay in business and continue working. This bill will empower these engines of growth to innovate and create cutting-edge products that can benefit us all."
BIO CEO Dr. Michelle McMurry-Heath:
“On behalf of the Biotechnology Innovation Organization (BIO) and its 1,000 member companies, we are proud to support the IGNITE American Innovation Act which will support start-ups through the economic crisis created by COVID-19,” said “This legislation is crucial in allowing the monetization of tax assets generated through a focus on research and technologies to provide much-needed liquidity for small biotechs to continue their critical mission to heal, fuel and feed the world.”
National Venture Capital Association President Bobby Franklin
“On behalf of startups, their 2.27 million workers, and investors, we are thrilled to endorse the IGNITE American Innovation Act, the most significant pro-startup proposal under consideration during economic recovery negotiations. This bill will create jobs and sustain critical economic activity immediately, activity that will pay long-term dividends to American workers and the U.S. economy through greater innovation and market competition, and more cutting-edge U.S. companies.”