Heesen

A tax bill passed by the U.S. House of Representatives today could double the taxes on venture capitalists as it relates to carried interest, effectively treating investors in early-stage companies worse than speculators in gold and oil derivatives, says the The National Venture Capital Association. The chief lobbying industry for the venture industry issued a harshly worded statement today after H.R. 4213 passed by a narrow margin of 215 to 204.

“It is both ironic and disconcerting that legislators can profess commitment to creating jobs – and then discourage the type of long term investment which has been a proven job creator for the last century," said Mark Heesen, president of the NVCA. "We are one step closer to unraveling an economic model that has made America the global center of entrepreneurship and innovation. We urge the U.S. Senate to make the necessary changes to maintain a meaningful incentive for long term investment in the start-up economy.”

Heesen continued:

“To those House members who consistently express interest in bringing more venture capital investment to their districts and states, I can tell you unequivocally that this is how NOT to attract investment. Today, you let down the venture capital community, the entrepreneurs that receive venture funding, and the innovators who bring new technologies to market. If this bill is signed into law, Congress should expect a further decline of venture investment over time, a move away from seed and early stage investment, and less innovation and job creation for our country.”

The bill now moves to the U.S. Senate, which will address the issue after Memorial Day.

Venture capitalists have been rallying against the bill, which they say would eliminate incentives to invest in startup companies. The bill would change the tax status on carried interest from capital gains to an ordinary income/capital gains blend. Seventy five percent of the carried interest would be taxed as ordinary income, while 25 percent as capital gains.

OVP Venture Partners' Gerry Langeler took to the airwaves earlier this week, explaining his position on the matter in an interview with CNBC.