Written by: Joe Wallin, Partner, Davis Wright Tremaine & Brian Todd, Partner, Davis Wright Tremain
Source: Originally published in TechFlash
Submitted by: Davis Wright Tremain


                      


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Obama's call for capital gains cut could supercharge startups
President Obama has proposed eliminating the capital gains tax on qualified small business stock. This has been a theme of the President’s for some time, but perhaps significantly he reiterated it in his State of the Union Speech last night. Again, he doesn’t quit.

As startup company and tax lawyers, we believe that eliminating the capital gains tax on qualified small business stock held for more than five years would create a literal flood of investments into startup companies, which would create jobs and future prosperity.

Why? Because reducing the capital tax rate to zero makes investing in startups tax free, and investors like tax favored investments. And a zero capital gains tax rate is an absolutely screaming deal.

The only way to make investing in startups more attractive would be to give taxpayers a tax credit for amounts invested in startups, but that would cause an immediate drain on tax receipts.

The Presidents’ proposal simply foregoes future tax revenues on startup company investment successes—and this is a good idea because startups that succeed create a lot of jobs and other revenue for the government.

We anticipate that if the President’s proposals become law we will see in the startup investment community a super intensified focus and interest in businesses that will qualify for this benefit...READ MORE.

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