Many states give a 20% tax credit (CREDIT-NOT DEDUCTION) on indirect small business investments (the laws meant to create jobs). Person-to-business loans count as indirect, if the loan is being payed back in full plus interest, but buying part of the company with the intent of recieving dividends does not count. So, essentially, you have to put your money at risk of not being paid back, and cant own any of the company, to get the credit.

So for every 10 million you invest, you get a 2 million striaght up tax credit, which will be 2 million back in your pocket come tax time. The idea is to pick businesses who are in no danger of failing and that can pay the money back quickly. The other idea is to use shell investments, so really the company is simply taking your loan, banking it to gain interest, never spending a dime and paying you back with none of it ever being at risk. Thanks to tax lawyers, accountants and their lobbies, and of course thanks to dirty politicians, this is legal, and yet another way rich people work the tax system like a cheap whore.

So, I "invest" 100 million, get a 20 million tax credit which far exceeds any taxes I'd actually be payin; and at about the same time I get a fat check compliments of the American taxpayers, all the businesses I "invested" in are paying me back my 100 million in full so I can turn around and do it again the next year.