Yee gads!  We already know that Wisconsin has superior angel tax credits than Minnesota (and by superior, I mean it actually HAS them) but this is getting ridiculous.

It would be perfectly understandable if the Badger State wanted to sit on its laurels and count the Minnesota startups fleeing to Madison or Hudson. Instead, as Minnesota preoccupied itself with NOT passing an angel credit, our rival was too busy making its already impressive program, Accelerate Wisconsin, even better. (Accelerate Wisconsin, BTW, sounds a lot snappier than Act 255.)

Wisconsin’s new budget more than triples the annual pool of credits for angels and venture capitalists from $11.5 million to $37 million. Angel credits move to $18.25 million while from $5.5 million; VC credits jumps to $18.75 million from $6 million.

To further sweeten the pot, Wisconsin now allows out of state investors to accumulate tax credits and sell them to anybody with a Wisconsin tax liability. The budget also allows investors to write off 100 percent of their capital gains taxes up to $10 million if they reinvest that money in another Wisconsin startup.

Wait, how can this be? After all, Wisconsin, like states across the country, has been grappling with record budget deficits and a recessionary economy. How can Wisconsin offer these tax credits against a $6.6 billion budget deficit while Minnesota couldn’t pass any credits because of a $5 billion shortfall?

“It’s really a matter of priorities,” said Zach Brandon, senior policy director for the Wisconsin Department of Commerce.

In times of economic distress, businesses tend to zero on its “core functions,” Brandon said. In Wisconsin’s case, Gov. Jim Doyle identified innovation and business development as the state’s core functions, he said.

And there you have it. The difference between Wisconsin and Minnesota is that one state has vision and political leadership and the other doesn’t. While one state stimulates capital and innovation, the other sits on its butt and argues that tax credits are a give away to the rich. One state has Accelerate Wisconsin, the other has JOBZ. ‘Nuff said.

Still don’t believe me? Check out the other stuff in Wisconsin’s budget (Source: Wisconsin Technology Council).

Feel free to weep.

Accelerate Wisconsin
The goal of this initiative is to accelerate new business development in Wisconsin. This initiative was adopted as part of Wisconsin Act 2.

Act 255 Enhancements
• Raise the cap on Act 255 tax credits for angel investments from $1 million to $4 million beginning retroactively for the 2008 tax year.
• Raise the aggregate creditable investment to $8 million per year from any combination of angel or venture sources, beginning January 1, 2011.
• Triple the annual pool of credits available from $5.5 million to $18.25 million per year for angel credits and from $6 million a year to $18.75 million for venture credits, beginning January 1, 2011.
• Allow angel investors to claim the entire 25% credit on their investment in the first taxable year.
• Permit insurance companies to claim the venture capital investment tax credit against gross premium tax liability.
• Permit the Department of Commerce to require that businesses seeking to raise funds specify the investment amount they wish to raise.
• Expand program eligibility
• Allow investors to transfer/sell their credits to one other person, with only one transfer allowed per 12 month period. The Department of Commerce will charge a fee to the seller equal to 1 percent of the credit amount sold or transferred.

Capital Gains Reinvestment
Allow individuals a limited 100 percent capital gains exclusion of up to $10 million for long-term capital gains reinvested in a Qualified New Business Venture (QNBV certified by Commerce under Act 255), beginning January 1, 2011.

Innovate Wisconsin
The purpose of this initiative is to increase R&D activities and biotechnology research in Wisconsin.

Sales and Use Tax Exemptions for Manufacturing and Biotechnology
The Governor will provide biotechnology companies an exemption to the sales and use tax for machinery and other tangible personal property used for qualified manufacturing or biotechnology research in the state, effective January 1, 2012.

Income Tax Credit for Increasing Research and Development
The Governor will provide businesses that increase R&D by more than 125% of their 3-year R& D average with an income and franchise tax credit worth $1 for each $1 of investment above 125%. For example, if a Wisconsin business spends an average of $3 million on R&D over a three year period, and then in the following year increases its expenditures to $5 million, it would receive a credit worth $1.25 million, equal to the value of the research above $3.75 million. This provision would take effect on January 1, 2011.

“Qualified research expenses” would be qualified research expenses as defined under the Internal Revenue Code incurred by the claimant for research conducted in Wisconsin for the tax year. (This is the same definition used for the research credit under current law.)

University Research
Research and development at our universities is an important part of the state’s economy. Advances in science, engineering and health care made there all support job creation and business development across the state.

• Strengthens Wisconsin’s leadership role in medical research by providing $2 for the Wisconsin Genomics Initiative, a collaborative effort between the Marshfield Clinic, Medical College of Wisconsin, UW-Madison School of Medicine and Public Health and UW-Milwaukee that will keep us at the forefront of personalized health care research.

• Places Wisconsin at the leading edge of renewable energy science by investing $4.05 million annually in research and development projects at the Great Lakes Bioenergy Research Center at the University of Wisconsin-Madison and related bio-energy projects UW-Milwaukee, UW-Stevens Point, UW-River Falls, UW-Green Bay. The projects are developing the next generation of bio-based fuels and energy.

• Provides $8.2 to support biotechnology, nanotechnology, and information technologies research at the Wisconsin Institutes for Discovery (WID), a visionary research institute at the University of Wisconsin-Madison charged with enhancing human health and welfare through interdisciplinary research.

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