Justin Field, vice president of government affairs at the National Venture Capital Association, said that the Senate’s proposed tax change would be “crippling” to the startup industry.

How far the provision gets remains to be seen. The National Venture Capital Association was successful in getting a similar proposal removed from the House tax bill, although it “didn’t fully appreciate” the Senate’s intention to add the tax provision, Field said. The association also helped to steer lawmakers away from a proposal discussed late last year to tax venture capitalists’ profits on investments at a higher rate.

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