Angel Investor Tax Credit v. CAPCO: More Bang for the Buck?

I. Introduction-Louisiana's Business Climate

Louisiana has traditionally performed poorly in attracting businesses, increasing jobs, and retaining the state's talented and intelligent youth. Even though Louisiana has the highest percentage of native born residents in the United States, it loses many more people to other states than it attracts.1 Consequently, it is one of the slowest growing states in the country in terms of population.2 Louisiana is one of only two southern states with more people moving out than moving in.3 A loss of 75,000 citizens due to domestic migration was experienced over the most recent five-year period reported by the Census Bureau.4 The population flight has been further exacerbated by Hurricanes Katrina and Rita. Those citizens who were previously committed to a life in Louisiana, but who were forced to leave temporarily, are discovering that the grass may actually be greener on the other side of the Sabine River. A loss of this many citizens, regardless of the cause, corresponds to a loss of desperately needed revenues for the state.

A large portion of this migration can be attributed to job opportunities in Louisiana that are inferior to those of neighboring states. No doubt, the "brain drain" suffered by Louisiana has been a disconcerting problem. Convincing Louisiana's youth to stay and pursue higher education in the state has been difficult. Trying to hold onto young people after graduation has been even harder. Louisiana's poor business climate, particularly lacking in high-paying and diverse job opportunities, is partly to blame for this phenomenon.

This comment will compare and contrast the two attempts of the Louisiana Legislature to turn around the state's economic outlook. Section II introduces Louisiana's innovative first attempt at stimulating venture capital investments, the CAPCO Program, and follows with an outline of some of the program's problems. Section III details the newly enacted Angel Investor Tax Credit and compares it with CAPCO while n...

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