Tech investor Alan Patricof not worried about capital gains tax hike

Alan Patricof, a longtime tech investor and Democratic donor, instructed CNBC on Monday he’s not involved about the prospect of higher capital gains taxes for rich Americans.

In an interview on “Closing Bell,” the co-founder of venture capital firm Greycroft did not throw his help behind a selected fee for the capital gains tax. He additionally steered the proposal not too long ago put out by President Joe Biden will seemingly “be modified in some way” after negotiations in Congress, the place Republicans have expressed opposition.

However, Patricof stated habits is unlikely to be swayed by a capital gains tax improve, notably because it pertains to investing in younger firms. Some enterprise capitalists, corresponding to Tim Draper, have contended that Biden’s proposal could negatively impact Silicon Valley.

“I believe that the amount of money that will be put into start-ups will be just as strong as it is now,”  Patricof stated. “Entrepreneurs are not going to stop and say, ‘Gee whiz, the capital gains rate is going up. I better not start my company.'”

“Venture capitalists like me are not all of a sudden going to turn their money back into their funds and say, ‘Gee whiz, the rate is going up, so we can’t justify making investments anymore,” added Patricof, an early investor in Apple and AOL.

Biden’s latest proposal requires elevating the tax fee on long-term capital gains to 39.6% from 20% for Americans who’ve an annual revenue of greater than $1 million. The 3.8% net investment income tax that is already regulation would successfully carry the highest fee to 43.4%.

Biden’s American Families Plan additionally requires elevating the highest revenue tax fee to 39.6% from 37%.

Additionally, a White House fact sheet for the plan says that Biden “is also calling on Congress to close the carried interest loophole,” which advantages managers of hedge funds, enterprise capital funds and personal fairness funds.

Patricof, whose venture-capital profession has stretched over 40 years, has lengthy advocated for the elimination of the carried-interest loophole, together with in a 2016 opinion article for The New York Times.

Patricof instructed CNBC he believes narrowing the differential in tax charges on wages and capital gains was “constructive,” with out particularly saying whether or not he thought they need to be positioned on the identical degree.

“I think that investors in general are going to invest their money the way they have before, and I think that new companies will be started. I think that funds will be formed. Private equity will prosper,” Patricof stated.

“I think you’ve seen it in the market,” he added. “I mean, the market is not collapsing because of his announced [proposed] change in rate. Everyone is expecting that the capital gains rate is going to go up. I don’t think it’s going to change behavior.”

Patricof donated 1000’s of {dollars} to Biden’s 2020 presidential marketing campaign, in addition to to the Biden Victory Fund, a joint fundraising committee, in line with Federal Election Commission information.

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