Monday, February 20, 2012

Obama and The R Pack: Pass a 100% Capital Gains Tax Exemption for Startups!

Politicians have a great opportunity to win votes and re-election in the 2012 general election cycle: pass legislation to promote investment in small businesses!

A permanent capital gains tax exemption in C corporations alone will generate a 15% increase in real return to investors.  Startup businesses under five years old account for almost all net growth in jobs in the USA over the past 25 years.


This is the kind of policy that can grow GDP and jobs.  Obama's proposal to permanently exempt startup capital in C corps is also good economic and political strategy.  The R Pack (Santorum, Romney, Gingrich, and Paul) would do well to make this a leading issue in an economic driven election.  We need leadership first, competition and name calling last!

Equal credit on the R side goes to Senators Moran and Warner's "Startup Act," and on The D the "Small Business Tax Extenders Bill" (text) introduced by Senators Snowe and Landrieu.

Write your Congressman: Senate and House (or call).

Encourage them to support these proposals and pass them immediately.  Let them know putting jobs for Americans first will go a long way in keeping their job on The Hill.  Tell them blogs like this are WATCHING what they do and making sure the blogosphere and social networks are aware.
As a CFO who in former years served as a campaign manager for a New York candidate running for Congress, I know both sides of this issue.   President Obama is truly on the right track here, as are these leaders in the Senate and House. 

Legislators need to look for ways to spur investment and capital flow to small businesses beyond the provision to C corporations to S corps, LLPs and LLCs. 

Section 1202 of the Internal Revenue Code allows 100% exclusion from federal taxable income of gain realized (up to $10,000,000) by investors who made qualified investments after September 27, 2010 and before January 1, 2012.  

Joe Wallin does a great job of laying out the technical tax laws on this.   
  • President Obama Proposes to Expand and Make Permanent Zero Capital Gains on Small Business Investments.  (Startup Law Blog)


  • Capital Gains Tax Exemption for Investment in Startups Would Help New Companies Cross the "Valley of Death.  (Kauffman Report)


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