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Summary:

The Obama campaign’s web site is suggesting that their new economic plan may be eliminating capital gains taxes for venture capital investors, a move that would surely be welcomed as VCs look for strategies that will carry them through a tough economy. For cleantech startups, such […]

The Obama campaign’s web site is suggesting that their new economic plan may be eliminating capital gains taxes for venture capital investors, a move that would surely be welcomed as VCs look for strategies that will carry them through a tough economy.

For cleantech startups, such a move could have an impact on freeing up investments, and could be particularly useful in light of the recent financial turmoil.

Dan Primack at peHUB spotted the wording in the campaign’s outline of its economic plan small business rescue plan.

Barack Obama believes that we need to encourage investment in small businesses to help create jobs and turn our economy around. That’s why Obama will eliminate all capital gains taxes on investments made in small and start-up businesses. Unlike John McCain, who wants to give $200 billion in new tax cuts to America’s largest and most profitable businesses, Barack Obama wants to cut taxes for the small businesses that create jobs but struggling with restricted access to credit alongside skyrocketing health care and energy costs.

Primack interpreted it to suggest that angels and VCs investing in early stages would likely benefit — provided Obama doesn’t also alter the tax treatment of carried interest from capital gains to ordinary income.

The National Venture Capital Association responded with a statement of cautious interest:

The zero capital gains rate for investment in small business is the most intriguing component and obviously would be favorable if it included venture investment but its too early to get excited – yet the direction sounds encouraging. As with all policy proposals, the devil is in the details as to how this would be implemented.

If true, the move wouldn’t just help cleantech startups secure funding; it might also dovetail nicely with Obama’s ideas on investing in alternative energies, such as a cleantech VC fund. Who knows if that wording will turn into action, but Obama is clearly making himself out to be a Silicon Valley ally and cleantech friendly.

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  1. Environmental Capital – WSJ.com : Green Ink: Oil Falls Again, and Gazprom Visits Alaska Wednesday, October 15, 2008

    [...] energy, at Greentech Media. Barack Obama continues trawling for the clean-tech vote, with a hint of capital gains tax cuts for VCs, at Earth2Tech. And will offshore wind power be the silver bullet for U.S. renewable energy?, at [...]

  2. Unfortunately, Obama has been a supporter of treating carried interest as normal income which would dampen institutional investment. Also, will it apply to investments made by individuals or investments made by institutions like VC funds? The details will count for a lot on a plan like this

  3. ah good… I have been writing Obama for 6 months pushing my 5 point plan to economic reform:
    1. teach business and investing at the high school level. A “how to achieve the American Dream” string of courses.
    2. Eliminate all taxes on investments, to promote investing in America by foreign businesses and businessmen. Just remember people, they can’t pick up the land and take it with them. It will always be American and for rent
    3. Listen to T. Boone Pickens, and give grant money to American Automakers to get us off oil.
    4. legalize marijuana- not only saves money fighting it, but creates money by taxing it. In addition to that, organized crime such as street gangs no longer profit from it’s sales to buy guns and fancy cars with to lure poor young people into their ranks.
    5. Get rid of NAFTA and raise taxes on any country who abuses it’s workers and doesn’t pay them a living wage. Such as China for example. Raise taxes to the point where their products are just as expensive as American products
    If these 5 things were to be done, the Economy would recover within 1 year’s time

  4. “Primack interpreted it to suggest that angels and VCs investing in early stages would likely benefit — provided Obama doesn’t also alter the tax treatment of carried interest from capital gains to ordinary income.”

    Reality: it just happened as of 2/25. Marginal rates on VCs will move from 15% to, oh… somewhere in the area of 55%. That is absolutely terrifying. The impact on American innovation and the offshoring of venture funding will be… absolutely staggering.

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