Sen. David Hoyle (D-Gaston), along with co-sponsors Sen. Daniel Clodfelter (D-Mecklenberg) and Sen. Clark Jenkins (D-Pitt), submitted the N.C. Life Science Development Corp. Act (SB 580) under the auspices of it creating jobs and expanding the area’s tax base. The wording of it gives the appearance that it would entice new industry to the area by engaging in “the discovery, development and commercialization of new pharmaceuticals, biologic products, medical devices and diagnostic products.”
What the bill would actually do is force already struggling North Carolinians to help subsidize a risk wealthy investors want to take. SB 580 establishes an investment company focused on financing life science companies, guaranteeing a rate of return for investors. If the rate of return is not met, the difference will be made up by providing tax credits to investors.
Such an arrangement is similar to Fannie Mae and Freddie Mac in that it privatizes profits while socializing risk. This will encourage investments in very risky entrepreneurial endeavors – those that wouldn’t be approved in the marketplace. The issuance of tax credits to investors would in actuality narrow the tax base, placing even further pressure on average working North Carolinians to shoulder a greater share of tax revenue to the state. The only return that would be seen would go to investors. If private capital markets deem these companies not worthy of investment, why should taxpayers shoulder the burden and assume the risk? Taxpayers could be on the hook propping up unprofitable companies that have no hope of success or viability. That is not a prudent use of scarce taxpayer resources.
The senators that indroduced this bill should be impeached and run out of the state.
ssouto – My my.. so anyone who disagrees should be impeached… whatever the disagreement that sort of comment gives conservatives a bad name.
I think the idea of seeding an area of with public money is just fine. The idea of opposing all attempts is ridiculous. I do agree that it should be limited to a certain amount.
The idea that the market always makes right decisions is stupid. Private markets have an advantage but they are not always perfect. This is especially true in health care areas. For example, research into nutrition is difficult to fund if it doesn’t lead to an expensive product or drugs, yet it has great social benefit. For example there are diet options to cholesterol drugs which offer more promise, yet it is impossible to fund the research.
Perhaps this is not the time for this investment. Maybe provisos should be added, but to reject it out of hand on theoretical grounds is silly.
The irony of this approach is that it would have been a good idea 30 years ago, when the nation’s economy was reeling from high interest rates and a recession and listening to fireside chats from Jimmy Carter. Back then, We had not yet taxed corporations and small businesses into oblivion. today, to ask any corporation to startup in this state, with sky- high taxes on everything, rampant corruption and waste in government, and a socialist/neostatist president obsessed with waste and control, is sheer folly. the climate for startup business in NC is toxic, and hostile. No business can prosper under this cloud, and our pocketbooks are already stetched to the max.