WASHINGTON DC – The National Venture Capital Association Monday said Republican presidential candidate Donald Trump, in a speech in Detroit calling for the elimination of the current tax treatment of carried interest, does not understand the critical role it has played in the growth of the U.S. entrepreneurial ecosystem.
“Despite the populist uproar, carried interest has been an important feature of the tax code that properly aligns the long-term interests of investors and entrepreneurs to build great companies together, and is only realized after our country receives the benefit of greater economic activity,” said Bobby Franklin, President and CEO of NVCA.
“Far from being a so-called ‘loophole,’ the carried interest venture investors receive is similar to stock awards received by the founders of a startup in that both the venture investors and founders commit the time, energy and creativity against huge risks to build new startups into successful companies. Rather than continue to toss around the proverbial political football to raise taxes on new company creation, let’s instead discuss ways we can encourage entrepreneurship and innovation by rewriting rules in the code which hurt or ignore startups. ”
In an appearance before the Detroit Economic Club on Monday, Trump fused his populist message with appeals designed to win support from the left—such as defraying households’ child-care costs—alongside a full embrace of policies on regulation, corporate taxes and energy production to try to please skeptics on the right.
Trump said he would modify his previous tax-cut proposal to mesh it with the framework advanced this summer by House Republicans. Their plan calls for reducing the seven income-tax brackets to three, at 12 percent, 25 percent and 33 percent.
The revamp would leave the top rate considerably higher than the 25 percent that Trump first proposed last fall. Trump maintained his original plan to cut corporate taxes to 15 percent but said he now also supports allowing businesses to immediately write off new investments, a change that brings his tax plan closer to that of House Republicans.
Trump promised to unveil a big infrastructure-spending plan, embracing a goal of Democrats, and said he would propose a new way for households to deduct average child-care costs from their taxes.
