Concerns were expressed at last week's International Business Forum venture capital conference in San Francisco that the venture capital industry would have to fight to stop the tax rate on carried interest from being raised from 15% to the ordinary income rate of 38%.
In February, President Obama’s 2010 budget plan revived a 2007 plan to increase the tax rate. Carried interest, the main source of venture capital income, will be taxed as ordinary income starting in 2011 if approved by Congress. Then, in April, Representative Sander Levin introduced a bill that would affect taxation on all carried interest in all sectors - private equity, hedge funds, real estate partnerships and venture capital.
The venture capital industry has always regarded itself as separate from these other sectors which are not focused on job creation. The National Venture Capital Association states that 18% of GDP and 1 out of every 10 jobs come from companies that were once venture-backed.
Although it could be difficult to separate out venture capital from other private equity, especially if buyout shops or hedge funds make small amounts of venture investments to qualify as a venture firm, Mark Heesen, the president of the National Venture Capital Association told the conference it could be distinguished, based on length of investment, size of investment and duration of investment. “Venture capital is perceived extremely differently in Washington,” Heesen said. “Interest is not interest. Mortgage interest and credit card interest are the same, but are they treated differently in Washington? Absolutely.”
Tax Shelters For Investors: Film, Finance, Forests, Venture Capital A comprehensive report in our Intelligence Report series examining tax-sheltering arrangements for investors, including Venture Capital, Forest Finance and Film Finance in a number of key jurisdictions, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report5.asp
Network Tweets
Network BlogsContent
provided by
|
Archive | Resources | Partners | Site Map | Links | Newsletter Archive | Contact | RSS Feeds | About | Syndication | Advertising & Marketing | Recruitment | Terms & Conditions | Privacy & Cookies
Copyright © 2012 - All Rights Reserved - Tax-News.com
IMPORTANT NOTICE: Tax-News.com has taken reasonable care in sourcing and presenting the information contained on this site, but accepts no responsibility for any financial or other loss or damage that may result from its use. In particular, users of the site are advised to take appropriate professional advice before committing themselves to involvement in offshore jurisdictions, offshore trusts or offshore investments.
Write a comment