VCs and Opportunity Zones

by & filed under NVCA Blog, Public Policy, Taxes.

Justin Field

Recently, we had the pleasure of hosting Navin Sethi with Ernst & Young LLP on a webinar to discuss the new Opportunity Zones program created by the recent tax cut law (if you missed it, click here for a recording). Navin frequently counsels wealth and asset management firms on partnership tax matters as well as providing guidance on how Opportunity Zones can apply to venture capital investments. 

The goal of the Opportunity Zones program is to drive more investment in underserved areas. Because venture capital investment is critical to economic growth and opportunity, our intent is to explore how compatible Opportunity Zones are to the startup investment model. This post will build off the great content we got from the webinar, provide a brief overview of the program, and go through some frequently asked questions from NVCA membership. (more…)

A Tax Reform Agenda for the Entrepreneurial Ecosystem

by & filed under NVCA Blog, Taxes.

Justin Field

Tax policy is one of the most powerful economic levers that policymakers have at their disposal. So it is concerning to see that instead of modernizing the tax code to recognize and support entrepreneurship, tax policy discussions in Washington have been more likely to focus on increasing taxes on the entrepreneurial ecosystem. For example, there have been calls to increase taxes on carried interest capital gains and repeal the Qualified Small Business Stock (QSBS) rules to pay for unrelated priorities.

At NVCA, we think this is the exact wrong way to view tax reform. Instead, tax reform should be an opportunity to support the creation and growth of more U.S. companies. We have submitted a policy paper to the U.S. Senate Committee on Finance detailing a tax reform agenda that would encourage new company formation. In this submission, we explain why startups are so critical to the country’s economic competitiveness, why startups are a unique business model, and call for a specific section in tax reform that should be devoted to proposals that would encourage new company formation. We then detail four tax reform proposals that would help startups without creating a new credit or deduction. These ideas include: (more…)

Correcting The Record On How QSBS Impacts The Entrepreneurial Ecosystem

by & filed under NVCA Blog, Taxes, Venture Investment.

Justin Field

At NVCA we are committed to helping policymakers craft pro-growth policies that help startups continue to drive the U.S. economy and encourage job creation.  So when we see articles that fail to understand how innovation and entrepreneurship work, it is our responsibility to correct the record.  This recent article in Politico makes just this mistake and threatens to undermine public support for an important provision of the tax code that encourages investment in early stage startups.

Let us start with a couple of facts that we should all keep in mind.  Twenty-five years ago, more than 90 percent of global venture capital was invested in U.S. entrepreneurs.  Last year, U.S. startups attracted 54 percent of global venture capital investment as other countries continue to reform their policies to build their ecosystems and compete with our long-held leadership in the space.  In addition, smaller C corporations have been vanishing.  As a result, the total number of U.S. public companies have been reduced by half in only 20 years. (more…)

Considering the Implications of Tax Reform on the Entrepreneurial Ecosystem

by & filed under NVCA Blog, Public Policy, Taxes.

Bobby Franklin

Like clockwork, with each new Congress comes a renewed push to embark on a wholesale rewrite of our nation’s tax code. Sure enough, the start of the 114th Congress is proving no different. Not only did President Obama touch on his priorities for tax reform in his State of the Union address last night, but the Senate Finance Committee recently announced the formation of five bipartisan working groups to develop concepts for a tax reform proposal. All of this comes after Rep. Paul Ryan (R-WI), the newly minted Chairman of the House Ways and Means Committee, announced his own intentions to proceed with a separate tax reform proposal in the House after he took over the gavel of the chamber’s tax-writing committee. (more…)

NVCA Weighs In with U.S. Senate on Tax Reform

by & filed under NVCA Blog, Public Policy, Taxes.

Jennifer Connell Dowling

In late June, Senate Finance Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) proposed jump-starting tax reform by starting with a “blank slate” that eliminates all tax expenditures – both corporate and individual – in the code.  They then asked their Senate colleagues to formally weigh in on which expenditures or credits should be added back into the code, based on which provisions would help grow the economy or make the tax code fairer. (more…)