Angel Insights Blog

By: Chris McCannell, Senior Government Affairs Consultant at GrayRobinson

With less than two months remaining in 2021, Congress is again facing a number of deadlines that will impact the angel investing community. 

On Friday, November 5, the House of Representatives finally passed the Bipartisan Infrastructure Bill, which the Senate passed in August by a vote of 69-30 (including that of Senate Republican Leader Mitch McConnell [R-KY]). The vote was delayed in the House by progressive members who wanted to ensure support for the broader reconciliation bill, President Biden’s Build Back Better plan, from House moderates and most importantly from Senate moderates Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ).

After Virginia’s statewide elections, where Republicans prevailed in a state that Biden won by more than ten points last year, and a similar close electoral call in New Jersey, Speaker Pelosi and moderate House Democrats were determined to get legislation passed.

Of note for ACA members, the bipartisan infrastructure bill set an expiration date of September 30, 2021 for the employee retention tax credit created by earlier coronavirus relief bills. ACA is working with a group of other associations focused on small businesses and the pandemic recovery to have the credit extended through December 31, 2021, but the path forward is uncertain; this legislation will pass only if added to another “must pass” legislative vehicle next month.

Build Back Better
 
Concurrently with passing infrastructure, a group of five moderate House Democrats negotiated with progressives to commit to support President Biden’s $1.85 trillion Build Back Better initiative. This legislation, which includes authority for Medicare to negotiate prescription drug prices, universal Pre-K, expanded family leave, historic investments in green technology and other so-called human infrastructure investments, is scheduled for a vote on the House floor the week of November 15.

For Angel Capital Association members, the provision in Build Back Better that we are focused on is a potential “pay-for” that would limit the use of the 100% capital gains exclusion on qualified small business stocks (Section 1202) for people who have an adjusted gross income over $400,000. For people making over $400,000 (or $550,000 for a couple) the 1202 exemption would be limited to 50% of the gain. Changes to 1202 will make early-stage investing less attractive to investors, and will ultimately affect entrepreneurs and job creation.

After a number of lobbying visits with key moderate Democrats and members of the tax-writing Ways and Means Committee, we have learned that this provision will stay in the House bill. ACA has established a coalition with Carta, the Center for American Entrepreneurship, National Venture Capital Association, Bio, and others to amplify our voice.

With the House poised to pass the legislation before Thanksgiving, our lobbying efforts are now targeted toward the Senate. Senators we are engaging with include Maggie Hassan (D-NH) and Catherine Cortez-Masto (D-NV), both on the tax-writing Finance Committee, and moderates Kyrsten Sinema (D-AZ) and Joe Manchin (D-WV). We are also working with the senior staffers in Senate Finance Chairman Ron Wyden (D-OR)’s office, with whom ACA has a longstanding relationship.

Timeline for Senate Action
 
With a 50-50 Senate and no Republican Senators willing to vote for the Build Back Better initiative, every Democratic Senator has influence—but none more than Senators Manchin and Sinema, who have expressed skepticism about certain parts of President Biden’s plan.

Senator Manchin has been consistent in insisting that the plan should be fiscally responsible and paid for, and that relief should be targeted based on income. Senator Manchin has also been very concerned about the bill’s potential to spur inflation, and specifically that the Build Back Better plan could add to the rising costs and supply chain disruptions we are currently experiencing.

While the President would like the Senate to act quickly on Build Back Better after House passage, various factors could delay it, most importantly negotiations with these Senators.

Our goal, as ACA and as part of a broader coalition, is to fight these changes to 1202 and to protect entrepreneurs and their ability to raise risky early-stage capital from our members. Angels are the lifeblood of the entrepreneurship system, and we are working hard to ensure that these provisions are kept out of the Build Back Better plan.

Call your Senator

We need your help to achieve this goal. We urge you to write or call your Senator, especially Democratic ones, to tell them to protect entrepreneurship and to remove the provision limiting 1202 from Build Back Better.

About the Author:

Chris McCannell brings more than 20 years of Washington experience and insight to the clients of GrayRobinson. His clients include Angel Capital Association, Prudential Plc., Center for American Entrepreneurship, National Association of Truck Stop Operators, Manufactured Housing Institute, 98Point6, US Travel, Etihad Airlines, and Broadmark Capital. Chris is known for his high-level engagement with House Democratic leadership on behalf of his clients.

Prior to joining Eris Group, GrayRobinson’s predecessor, Chris led APCO Worldwide’s Washington financial services and government relations practice. He previously served as vice president of government affairs at Ameriprise Financial and as a director at Quinn Gillespie & Associates, a bipartisan government relations firm in Washington, D.C.

Before joining Ameriprise Financial, Chris was chief of staff to Rep. Michael E. McMahon. Earlier in his career, he served as chief of staff and floor assistant to Rep. Joseph Crowley, a member of the Committee on Ways and Means and chair of the Democratic caucus. Chris was also press secretary to Rep. Steny H. Hoyer. He began his career as a press assistant in the office of Sen. Frank Lautenberg and the office of the Democratic Policy Committee.

Chris holds a Bachelor of Arts in political science with a concentration in international relations from Fordham University.