On Thursday, President Trump asked the Republican legislators to end tax benefits.
The tax compensation enables private equity and venture fund managers to treat their revenue from plants at lower capital profit interest and not as a decent income.
Removing the tax compensation would be a great success for the VC industry.
“Interest encourages intelligent, high risk investment in innovative startups with high growth,” Bobby Franklin Bobby Franklin, President and CEO of National Venture Capital Association (NVCA) said in an explanation.
Trump ended the interest gap worn when he fought for the president in 2016. However, when he took office for his first term, his removal was not included in the law on tax reductions and jobs in 2017. Instead, The tax code has been changedExtension of the holding time for assets in order to qualify for the capital profit interest from one year to three years.
Since risk capital companies rarely sell assets one year after the first activity of an investment, this change was completely satisfactory for the industry.
“The Trump tax legislation of 2017 kept the risk fantasy in aspiring technologies such as AI, crypto, biosciences and national defense. A change will now disrupt this progress and damage small investors disproportionately, especially in Central America, ”said Franklin.
Despite the concerns of the NVCA, the vast majority of the capital, which has invested in emerging technology companies, comes from New York and Silicon Valley, whereby North California remains particularly dominant.
