A tax cut's false start

(FSB Magazine) -- IT SEEMS THAT EVERYBODY WANTS TO GIVE A TAX CREDIT TO ANGEL investors who pour startup capital into new small businesses. Twenty-one states already offer it, and a House bill including the credit for angels who invest as much as $500,000 annually has won fans on both sides of the aisle. But despite all the love it's garnered, the federal bill - reintroduced in January - is unlikely to pass anytime soon.

The problem? New "pay-go" rules require Congress to offset new tax cuts like this one - known as the Access to Capital for Entrepreneurs Act - with new income or spending cuts, so this bill will probably see the light of day only if it's attached to an omnibus tax-reform bill that makes up for the lost revenue. "It does seem self-evident," says Ann Sullivan, lobbyist for Women Impacting Public Policy (wipp.org), a trade group that backs the bill. "But it's too small to move by itself."

Unfortunately a Congress hashing out contentious issues such as the Iraq war doesn't have much appetite for big bipartisan bills these days. Which means this may be another example of a great, universally loved idea that falls victim to partisan rancor.