In our ongoing coverage of potential changes in the carried interest tax rates, news from the White House today suggests that President Obama has reached a compromise with Republican leaders to extend the 15% long-term capital gains rate and to reduce the estate tax from 55% to 35% on estates above $5M beginning next year.
Most importantly for venture capitalists, the agreed upon deal does not include the carried interest rate hike proposed in the Baucus amendment back in September 2010. I’m writing about this because it is a significant reversal in policy for the White House, which they have acknowledged. In light of this change in policy and the the increased percentage of Republicans in congress following the November elections, a carried interest rate hike now seems unlikely in the near future. Notwithstanding the tongue-in-cheek graphic in this post, this has been of great concern for venture capitalists who have already been dealing with one of the worst exit (IPO/M&A) markets in recent memory.
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