Comments on: Kate Mitchell goes to Washington, to defend VCs from new tax http://venturebeat.com/2007/07/10/kate-mitchell-goes-to-washington-to-defend-vcs-from-new-tax/ News About Tech, Money and Innovation Wed, 25 Nov 2009 06:07:42 +0000 http://wordpress.org/?v=2.8.5 hourly 1 By: whatmeanstheworldtoyou http://venturebeat.com/2007/07/10/kate-mitchell-goes-to-washington-to-defend-vcs-from-new-tax/comment-page-1/#comment-825805 whatmeanstheworldtoyou Fri, 15 Aug 2008 16:11:24 +0000 http://venturebeat.com/2007/07/10/kate-mitchell-goes-to-washington-to-defend-vcs-from-new-tax/#comment-825805 Good Comment, I like the idea of re-investing for venture capital instead of blowing all my money on <a href="http://washingtondc.nyctourist.com/washingtondc-vacation-packages.php" rel="nofollow">washington dc vacation package</a> or some frivolous <a href="http://washingtondc.nyctourist.com/washingtondc-luxury-hotels.php" rel="nofollow">washington dc luxury hotel</a> so now next time im in DC i will have to think about staying with family in hopes of investing properly one day. Good Comment, I like the idea of re-investing for venture capital instead of blowing all my money on washington dc vacation package or some frivolous washington dc luxury hotel so now next time im in DC i will have to think about staying with family in hopes of investing properly one day.

]]> By: PC http://venturebeat.com/2007/07/10/kate-mitchell-goes-to-washington-to-defend-vcs-from-new-tax/comment-page-1/#comment-371889 PC Thu, 12 Jul 2007 17:34:34 +0000 http://venturebeat.com/2007/07/10/kate-mitchell-goes-to-washington-to-defend-vcs-from-new-tax/#comment-371889 I'm on the side of not taxing the Carry, but the I have to agree with the above comments. In short, Carry (Profits, less the return to LPs) is different than Invested Capital. Her personal investment (as a LP or side car, whatever) are clearly different. Her argument plays on those that don't understand the economics of venture capital and serves to only further mystify the field. In the end, VCs look like overly wealthy individuals that are greedily evading taxes. That certainly not the case for the majority of VCs that haven't had massive exits or work for the mega firms. Perhaps another way to look at this is to think of Carry as deferred compensation for work completed in the past (longer than the capital gains threshold). Now, in reality, it's closer to a bonus (cumulative of many years work) than compensation but thats the closest I can come to long term holdings. I’m on the side of not taxing the Carry, but the I have to agree with the above comments. In short, Carry (Profits, less the return to LPs) is different than Invested Capital. Her personal investment (as a LP or side car, whatever) are clearly different. Her argument plays on those that don’t understand the economics of venture capital and serves to only further mystify the field. In the end, VCs look like overly wealthy individuals that are greedily evading taxes. That certainly not the case for the majority of VCs that haven’t had massive exits or work for the mega firms.

Perhaps another way to look at this is to think of Carry as deferred compensation for work completed in the past (longer than the capital gains threshold). Now, in reality, it’s closer to a bonus (cumulative of many years work) than compensation but thats the closest I can come to long term holdings.

]]> By: Bob http://venturebeat.com/2007/07/10/kate-mitchell-goes-to-washington-to-defend-vcs-from-new-tax/comment-page-1/#comment-371091 Bob Wed, 11 Jul 2007 18:53:12 +0000 http://venturebeat.com/2007/07/10/kate-mitchell-goes-to-washington-to-defend-vcs-from-new-tax/#comment-371091 This is the best th VC's could do Kate Mitchell from Scale ventures what a waste of time. This is the best th VC’s could do Kate Mitchell from Scale ventures what a waste of time.

]]> By: billm http://venturebeat.com/2007/07/10/kate-mitchell-goes-to-washington-to-defend-vcs-from-new-tax/comment-page-1/#comment-370566 billm Wed, 11 Jul 2007 04:23:39 +0000 http://venturebeat.com/2007/07/10/kate-mitchell-goes-to-washington-to-defend-vcs-from-new-tax/#comment-370566 “I took the savings I have, and money I’ve made from my career, and invested,” she said. “I’m hoping to get carried interest. I haven’t seen it yet.” That is highly disingenuous. The clear implication of that statement is that she is somehow getting carried interest on the "savings" she "invested" and that is what the government is trying to change. Of course, that is not actually the case. The returns on her savings and the potential carry are two totally different things. No one is talking about taking away the cap gains treatment on the actual money invested. The carry is completely independent of that (she would get it regardless of whether she invested any personal funds at all). I personally fall on the side of retaining cap gains treatment for carry, but she is trying to play language games here to suggest something that is just not true. If she tries to raise it this way I think she'll get destroyed during testimony. “I took the savings I have, and money I’ve made from my career, and invested,” she said. “I’m hoping to get carried interest. I haven’t seen it yet.”

That is highly disingenuous. The clear implication of that statement is that she is somehow getting carried interest on the “savings” she “invested” and that is what the government is trying to change. Of course, that is not actually the case. The returns on her savings and the potential carry are two totally different things. No one is talking about taking away the cap gains treatment on the actual money invested. The carry is completely independent of that (she would get it regardless of whether she invested any personal funds at all).

I personally fall on the side of retaining cap gains treatment for carry, but she is trying to play language games here to suggest something that is just not true. If she tries to raise it this way I think she’ll get destroyed during testimony.

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