Examining the Effectiveness of State Funded Angel Investor Tax Credits: Initial Empirical Analysis

Joseph R Bell, James E Wilbanks, John R Hendon

Abstract


Many states are issuing tax credits for qualifying angel investments in order to encourage economic growth and development. While this policy makes intuitive sense, there has been no systematic evaluation of the outcomes of these programs. This study is a first step toward empirically examining the effectiveness of angel investment tax credit programs. We utilize the Kauffman Entrepreneurial Activity Index as an outcome to measure the initial statewide impact of the introduction of angel tax credit programs. Initial results support the introduction of angel tax credit programs does increase entrepreneurial activity on a state level.


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 University of Houston-Clear Lake