August 24, 2016

Politico: Morning Tech: A look inside Clinton’s extensive tech policy squad

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“VCs say that such a policy would deter investors from committing to risky, long-term projects that yield large payoffs. Additionally, critics of such reform argue that it could inhibit talent from entering venture capital, since it reduces the financial incentive. The National Venture Capital Association says that up to 60 percent of a venture capitalist’s income could come in the form of carried interest: “It’s basically doubling our tax rate,” Venky Ganesan, the organization’s chairman, told Bloomberg of the potential change. Despite the industry’s arguments that lower tax rates help spur innovation, it remains to be seen whether they can prove that venture capital is uniquely dependent on them. “They all argue that they are special,” says Matt Gardner, executive director at the Institute on Taxation and Economic Policy, a think tank in Washington; he notes that an updated carried interest tax rate could generate roughly $25 billion over 10 years.”

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