Thursday, September 29, 2016

Carried Interest – How it is Treated Matters!

IMHO whether it is Trump or corrupt Hillary, if either candidate as president succeeds to get Congress to overturn the current treatment of carried interest, it will DEFINITELY impact Silicon Valley, tech, hiring, and overall US competitiveness. I had worked successfully in Silicon Valley for 2 decades before I even understood how carrier interest works. But the tax treatment of carried interest matters!

The US is still heads and shoulders above the rest of the world in tech and innovation.

Penalizing those in the ecosystem that take the big risks associated with such success would definitely be counterproductive

Whatever you tax heavily will be discouraged. Chief Justice John Marshall got it right when he famously wrote "the power to tax involves the power to destroy"

Here is the article from Anand Sanwal at below:

I'm outta here

The topic of carried interest has come up in this year's US presidential election. For those unfamiliar, this description from a recent Bloomberg article (see The Blurb for link to full article) describes the debate.

The venture community is torn on the topic, with some VCs saying the current tax treatment should be changed while others argue that it's correct. But most don't say that the treatment of carried interest would impact their choice of vocation.

Keith Rabois (@rabois) of Khosla Ventures (a great follow on Twitter btw) isn't having it. He has said pretty emphatically that he's out of the VC game if carried interest goes away.

For the other VCs on the newsletter, are you getting out of VC if carried interest goes away?

Yes, I'm out
No. I like the current rule but wouldn't stop
No. And I think carried interest rules should change

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