As in the UK, so in the US. VCs in both countries are up in arms about the near-doubling of the tax-rate they pay when they realise their investments.
In Chancellor Alistair Darling’s recent spending review he proposed that the tax paid by UK VCs when they sell their investments should go up from 10 to 18 per cent.
In the US the proposed tax increase is also a near-doubling of the rate. “This would make venture investing the US less attractive. It frustrates me that no one is paying attention to this,” Ted Schlein, a partner in Silicon Valley’s premier VC firm, Kleiner, Perkins, Caufield & Byers, told the San Francisco Chronicle.
Reducing capital gains tax on VC investments has, historically, has always given a fillip to start-up activity in the Valley.
Conversely, a hike in the rate will very likely reduce it.
It seems madness to discourage start-ups when the health of the high technology industry depends on them
Has the madness of US-UK foreign policy started to infect fiscal policy? If so, Lord help us.
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Comments (3)
The moral is: Be careful what you wish for
The BBC news repoprt on this "BROWN ALLY CRITICAL ON CGT CHANGE"
http://news.bbc.co.uk/1/hi/uk_politics/7084284.stm
"Mr Darling announced the abolition of CGT taper relief in favour of a flat 18% rate in his Pre-Budget Report.
This was amid demands for a crackdown on private equity profits.
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Mr Darling has said the measure will ensure private equity firms pay fairer taxes. "
You were one of the people criticisizing private equity for low tax rates; in an earlier chat I said it was an obvious side-effect of trying to give VCs a low tax-rate.
WellMr Brown gave you what you asked for...
Posted by Roberto | November 8, 2007 12:55 PM
Posted on November 8, 2007 12:55
Not Brown, it was this fool Darling.
The same guy who said depositors' savings were safe in Northern Rock, and that depositors shoudn't queue to take out their savings, a week before the Bank of England had to bail out Northern Rock to the tune of £23bn.
My prognosis on private equity taxation failed to take into account that we could get a blithering idiot as Chancellor.
Having got that off my chest, yes, you were right.
Posted by David Manners | November 8, 2007 1:12 PM
Posted on November 8, 2007 13:12
Funnily enough, have you seen today's FT? There's an interview with Sir Ronald Cohen, founder of Apax and Gordon Brown ally, calling on Darling to back down from his proposals.
Posted by David Manners | November 8, 2007 2:39 PM
Posted on November 8, 2007 14:39