(WASHINGTON, D.C., July 2, 1999) The Biotechnology Industry Organization (BIO) today praised U.S. Rep. Jennifer Dunn (R-Wash.) for introducing a House bill (H.R. 2331) that eliminates capital gains taxes for long-term investments in stocks of small corporations companies with $300 million or less in direct capital infusions.
U.S. Rep. Robert Matsui (D-Calif.) is the lead Democratic cosponsor of the legislation.
The proposal, a revised version of a bill Dunn submitted in 1997, would cut the capital gains tax rate to zero for direct investments in newly issued corporate shares. The current tax rate for these and other investments is 20 percent.
To qualify for the tax exemption the stock must be purchased through a venture capital or private placement, an initial public offering, or other sale directly from the company. Included are founder's stock, stock options and stock purchased by outside investors. The exemption applies to individual and corporate investors, who must hold the stock three years.
ôThis incentive is tailor-made for investments in high technology firms,ö said Chuck Ludlam, BIO vice president for government relations. ôIf enacted, we hope that the Dunn bill might help reopen the capital markets for our companies. We believe it is realistic to pursue this bill because the amount of lost tax revenue will not be severe. We might have an opening in the fall when Congress is expected to consider a small business tax bill.ö
The bill's chances, Ludlam noted, also are enhanced because Dunn and Matsui are respected members of the House Ways and Means Committee. Cosponsors include Reps. Thomas Davis (R-Va.), Calvin Dooley (D-Calif.), David Dreier (R-Calif.), Anna Eshoo (D-Calif.), Bob Goodlatte (R-Va.) and Jerry Weller (R-Ill.)
The Dunn bill is supported by a high tech coalition that includes BIO, the American Electronics Association, Software Information Industry Association and National Venture Capital Association.
BIO represents more than 850 biotechnology companies, academic institutions and state biotechnology centers in 47 states and 26 nations. BIO members are involved in the research and development of health care, agricultural, industrial and environmental biotechnology products.