US Prepares To Tax The Bejesus Out Of VCs

Brad Burnham, Albert Wenger, Fred Wilson CORRECT 400x300Get ready to pony up, USV!

Venture capitalists, who pay themselves by taking a cut of the investment gains they’ve earned for their investors, typically pay about 15% in federal taxes though the capital gains tax.But the tax rate for VCs could soon shoot up to around 37%, reports Andrew Ross Sorkin of the New York Times.

Andrew says the government is considering “a tax rule that would treat the investment gains of partners in hedge funds and private equity firms as ordinary income rather than as capital gains.”

The new rule could net the government more than $25 billion in new revenues, says Andrew. (Of course, that’s only if VCs and other private equity managers, such as hedge fund operators, don’t figure out a way around the new tax.)

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