New Mexico governor and Democratic Presidential candidate Bill Richardson has come out with a nuanced position on proposals to increase carried interest tax, like the recently passed House bill that aims to use such revenue to counterbalance the repeal of the Alternative Minimum Tax Act. He issued a statement today in opposition to increasing the tax for venture and private equity firms, but in support of increased taxation for hedge funds and publicly traded partnerships.
Hedge fund and publicly traded partnership income “should be taxed as regular income, both in order to pay for the AMT fix as well as to ensure that their executives pay the same taxes as every other American,” the statement said.
It went on to note, however, that as Richardson has previously remarked: “Increasing the burden on venture capital and private equity firms will damage our economy as well as our capacity for innovation.”
Venture-backed firms constitute 10 percent of the US economy and are “at the centre of our innovative power”, he said. “If we are to maintain our position as the world’s leading economy, we must maintain our power to innovate.”
Richardson subsequently pledged, if elected President, to enact a federal angel investor tax credit, double the research and experimentation tax credit, and increase student visas to “further boost our innovation infrastructure”.
Nearly all of his fellow Democratic running mates have issued statements supporting the taxation of carried interest as ordinary income, at a rate of as high as 35 percent, as opposed to its current capital gains designation, which has a rate of 15 percent. New York Senator Hillary Clinton notably called the notion of taxing carry as capital gains “offensive”.
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