Obama: Eliminate Cap Gains on Small Business Investment
We've spent countless hours discussing the issue of carried interest taxation, and whether such investment fund profits should be treated as capital gains (status quo) or ordinary income (status fro). It's a particularly contentious issue among venture capitalists, who believe a change away from capital gains would choke new business creation and job growth. But maybe all the VC fretting was for naught, based on the following words from President Obama during tonight's State of the Union address: "I am also proposing a new small business tax credit – one that will go to over one million small businesses who hire new workers or raise wages. While we're at it, let's also eliminate all capital gains taxes on small business investment; and provide a tax incentive for all businesses, large and small, to invest in new plants and equipment." Does this mean that angel investors would no longer be required to pay taxes on investment returns? Does it mean the same for venture capitalists, or at least those investing in early-stage businesses? Would there even be a holding period requirement?
