ARLINGTON, VA--(Marketwire - May 20, 2010) - The following statements can be attributed to Mark Heesen, President of the National Venture Capital Association:
"The provision in HR 4213 to tax 75 percent of venture capital carried interest at ordinary income rates and 25 percent at capital gains rates will more than double the taxes that long term investors pay when they build successful companies and create jobs. While this provision is movement away from a pure change to ordinary income, evidencing a House recognition that this type of long term investment is critical to US economic growth, it by no means creates enough of a differential to continue to encourage long term investment in America's start up companies. We hope that this provision can be amended so that there is a meaningful differential -- and a real incentive for venture investors to work with entrepreneurs to continue to build America's next generation of employers.
"The venture industry takes serious issue with the title of this bill for two reasons. First, referring to the carried interest tax structure as a 'tax loophole' is untruthful. The capital gains treatment of carried interest has been a legal part of the tax code for decades. Additionally, to characterize this as an 'American Jobs' bill is ironic as doubling the taxes on job creators will result in less jobs, not more, effectively negating any provisions in the bill that will actually support US employment numbers. The venture capital community has continued to create thousands of US jobs each month throughout the recession without any type of government subsidies and plays a critical role in our country's economic growth and ongoing global competitiveness. This role needs to be supported by Congress.
"We urge members of the House of Representatives and those in the Senate working on legislative language of their own, to seriously reconsider the carried interest provision and redraft the language so that a meaningful differential is maintained and long term investment in start up companies is encouraged at a time when America needs jobs the most."