President Obama’s State of the Union address last night covered a wide variety of topics, from Wall Street regulation to healthcare reform to jobs creation and more. One of the most interesting snippets from last night, however, was a quote regarding capital gains taxes for small business investment, which I tweeted about as (potentially) being a very big deal for VC as it relates to taxation of alternative-asset firms. After all, VC is very much about investing in small start-up businesses that can help create jobs, right?
A couple of hours later, a friend mentioned to me that Dan Primack of peHUB had just written an article that expressed very similar thoughts as mine. Primack asks, “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?”
Nobody knows the whole story right now, but it does seem like a pretty big possible move in future legislation. Instead of going from the lower capital gains tax rate to the higher ordinary income tax rate, certain angels and VCs may see this issue disappear altogether. Ultimately, we’ll just have to watch and see how Obama decides to execute.
Note: Please visit peHUB for the full taxation quote from the President Obama’s State of the Union address. Image from BusinessPundit.com.
