Thanks to Ed Paisley over at Center for American Progress for pointing me toward this interesting tidbit in the Wall Street Journal’s interview with Barack Obama yesterday. Buried in the last section of the article is a section entitled "Startup Companies":
Sen. Obama also proposes eliminating capital-gains taxes on start-up companies, though he backs higher capital-gains rates overall. He hasn’t defined precisely what he means by a "start-up." Wasn’t he concerned that tax lawyers would simply form "start-ups" for existing companies looking for a new tax break?
"There are always folks who are interested in gaming the system, and obviously one of the things you have to do with tax policy generally is to pin down definitions so they’re not twisted beyond recognition," he said. But he argued, "Companies that are starting off…should be allowed to accumulate capital, reinvest profits, if there are any, to the point that they stabilize."
It is the first of I’ve heard of the plan, so I socialized the concept with a few friends that advise tech startups. The feedback was (predictably) universally positive.
One interesting point that was raised was that this could be particularly beneficial to IP-intensive startups looking to sell their companies and/or those looking to sell IP that is not going to be core to their business going forward.
It’s a really interesting concept, so we’ll try to do some more analysis of the plan going forward. If anyone has thoughts on things we should consider, please let me know.