Tech investor Alan Patricof isn’t worried about capital gains tax hike
In an interview on “Closing of the bell” the co-founder of venture capital firm Greycroft did not support a specific rate for capital gains tax. He also suggested the proposal recently presented by the President Joe biden will likely be “changed in some way” after negotiations in Congress, where Republicans have opposition expressed.
However, Patricof said the behavior was unlikely to be influenced by an increase in capital gains tax, especially with regard to investment in young companies. Some venture capitalists, such as Tim draper, argued that Biden’s proposal could have a negative impact on Silicon Valley.
“I believe that the amount of money that will be invested in start-ups will be just as important as it is now,” said Patricof. “Entrepreneurs aren’t going to stop and say, ‘Damn, the rate of capital gains is going up. I’d better not start my business. “”
“Venture capitalists like me aren’t going to suddenly turn their money back to their funds and say, ‘Damn, the rate is going up, so we can’t justify investing anymore,’ added Patricof, a early investor in Apple and AOL.
Biden’s recent proposal calls for raising the long-term capital gains tax rate to 39.6% from 20% for Americans with annual income of more than $ 1 million. the 3.8% tax on net investment income it is already the law that would effectively raise the highest rate to 43.4%.
By Biden Plan of American families also calls for the top tax rate to be raised from 37% to 39.6%.
In addition, a White House fact sheet for the plan says Biden is “also calling on Congress to close the door on carried interest,” which benefits managers of hedge funds, venture capital funds, and private equity funds.
Patricof, whose career in venture capital has grown over 40 years, has long advocated for the elimination of the interest deferral loophole, in particular in a 2016 opinion piece for the New York Times.
Patricof told CNBC he thought the narrowing of the wage and capital gains tax differential was “constructive”, without specifically saying whether he thought they should be placed on the same level. .
“I think investors in general are going to invest their money like they’ve done before, and I think new companies will emerge. I think funds will be formed. Private equity will flourish,” Patricof said.
“I think you’ve seen it in the market,” he added. “I mean the market is not collapsing because of his announcement [proposed] rate change. Everyone expects the rate of capital gains to rise. I don’t think it will change behavior. “
Patricof has donated thousands of dollars to Biden’s 2020 presidential campaign, as well as the Biden Victory Fund, a joint fundraising committee, according to Federal Election Commission records.