Venture capitalist Alan Patricof: Capital gains tax hike would not change investor behavior

Alan Patricof, a longtime tech investor and Democratic donor, told CNBC on Monday he’s no longer desirous concerning the likelihood of elevated capital gains taxes for prosperous Americans.

In an interview on “Closing Bell,” the co-founding father of venture capital agency Greycroft did no longer throw his reinforce at the support of a particular rate for the capital gains tax. He also urged the proposal lately put out by President Joe Biden will likely “be modified in a technique” after negotiations in Congress, where Republicans secure expressed opposition.

However, Patricof acknowledged behavior isn’t any longer at possibility of be swayed by a capital gains tax expand, particularly because it relates to investing in young companies. Some venture capitalists, such as Tim Draper, secure contended that Biden’s proposal might perhaps maybe negatively impact Silicon Valley.

“I mediate that the amount of cash that will be put into launch-u.s.a.will be appropriate as precise because it is now,”  Patricof acknowledged. “Entrepreneurs are no longer going to stop and voice, ‘Gee whiz, the capital gains rate is going up. I greater no longer launch my company.'”

“Undertaking capitalists love me are no longer all of a unexpected going to turn their cash support into their funds and voice, ‘Gee whiz, the tempo is going up, so we can no longer justify making investments anymore,” added Patricof, an early investor in Apple and AOL.

Biden’s most modern proposal calls for raising the tax rate on long-timeframe capital gains to 39.6% from 20% for Americans who secure an annual earnings of extra than $1 million. The 3.8% rating funding earnings tax that is already legislation would successfully bewitch the high rate to 43.4%.

Biden’s American Households Conception also calls for raising the high earnings tax rate to 39.6% from 37%.

Additionally, a White Residence truth sheet for the idea says that Biden “is also calling on Congress to shut the carried passion loophole,” which benefits managers of hedge funds, venture capital funds and private equity funds.

Patricof, whose venture-capital profession has stretched over 40 years, has long advocated for the elimination of the carried-passion loophole, in conjunction with in a 2016 idea article for The Original York Times.

Patricof told CNBC he believes narrowing the differential in tax charges on wages and capital gains develop to be “positive,” with out particularly pronouncing whether he thought they wants to be placed at the an identical level.

“I mediate that investors on the final are going to make investments their cash the map they secure earlier than, and I mediate that original companies will be started. I mediate that funds will be fashioned. Non-public equity will prosper,” Patricof acknowledged.

“I mediate you’ve seen it available in the market,” he added. “I mean, the market isn’t any longer collapsing ensuing from of his launched [proposed] alternate in rate. Everyone looks to be watching for that the capital gains rate is going to dart up. I don’t mediate or no longer it’ll alternate behavior.”

Patricof donated hundreds of greenbacks to Biden’s 2020 presidential campaign, besides to to the Biden Victory Fund, a joint fundraising committee, in accordance with Federal Election Commission info.