Policies

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Carried interest aligns an investment managers interest with that of their investors by providing the manager a portion of the funds profits. This carried interest is taxed at long-term capital gains rate because it is investment capital.

Action Requested: Congress should maintain the current treatment on carried interest to continue to drive investment into the innovation ecosystem.

American businesses were previously permitted to deduct 100% of R&D expenses from taxable income in the year those expenses were incurred. This promoted innovation by powerfully incentivizing critical investments in research and technological advancement. Those investments led to countless scientific breakthroughs, powered economic growth, and produced significant commercial and military advantages for the United States. 

Action Requested:  Congress should restore 100% immediate expensing.

Building a new business requires investment and spending long before the first dollar of revenue. Tax law permits companies to deduct these losses — net operating losses, or NOLs — in future years when they have revenue and profits. Currently, Sections 382 and 383 punish startups by erasing the NOLs if a company receives an investment that is perceived as a change in ownership.

Action Requested: Congress should establish a safe harbor for startups.

Qualified small business stock exemption drives capital and talent to the startup ecosystem. It enables QSBS shareholders that hold that equity for 5+ years to be exempt from capital gains.

Action Requested: Congress should preserve and expand this important provisions by expanding it to other business entities and clarifying it applies to key financing arrangements.

Broadening employee ownership helps companies attract and retain talent, as well as create a more engaged workforce.  It also helps employees participate in the upside they create. To help employees optimize the value of that equity ownership, which is often illiquid in startups and growth-stage companies, it should only be taxed at time of sale. 

Action Requested: Align tax liability — both directly and on alternative minimum tax calculations — on equity ownership to the year of sale.