The debate about “carried interest” tax rates on venture capitalists and entrepreneurs refuses to go away even as tax-hike proposals have failed.
Dan Primack, a proponent of the changes, wrote Wednesday about whether company founders should face higher taxes on their shares? Citing a report in the New York Post that a change would produce $100 billion in additional tax revenue, Primack wrote:
“The issue here is whether changing this tax break would significantly dissuade potential entrepreneurs from hanging their own shingles. My gut feeling is that it would, and perhaps in great numbers. There are many factors that contribute to the creation of an entrepreneur – including passion for the product and a desire to be one’s own boss – but the prospect of future riches is right up there. Given how few entrepreneurs actually succeed, it would seem counterproductive to lighten the pot of gold.
“This stands in contrast to my feelings on carried interest, as not a single significant VC or PE pro has ever promised to change careers were that tax treatment altered.”
Read more here.
Over at PE Hub, meanwhile, a Reuters Breakingviews report wrote this:
“Carried interest should be taxed as income rather than capital gains.”
Richard Beales condemned the failure to change carried interest thusly:
“With carried interests taxed as they are, part of the ultra-rich population ends up with a proportionately light tax burden. That’s regressive and unfair. However modest the impact on America’s finances, abandoning this particular tax increase, as looks the case for now, sets a disappointing example.”
Read more here.
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