Venture capitalist Alan Patricof says higher capital gains taxes proposed by President Joe Biden won’t slow startup funding, putting him at odds with fellow VC Tim Draper, who warns the plan could “kill the golden goose” of Silicon Valley. Patricof, an early investor in Apple and other iconic tech firms, believes entrepreneurs and investors will continue to back startups despite higher levies, including the potential elimination of preferential taxation on carried interest.
The debate is especially relevant for pension funds, which have increased allocations to venture capital from 6.2% in 2017 to 7% in 2020. While the Biden plan would raise the top long-term capital gains rate from 20% to 39.6% for high earners, and up to 43.4% including the net investment income tax, UBS data suggest similar past hikes had little effect on market performance. Meanwhile, M&A activity among brokerages and RIAs surged in Q1 2021 in anticipation of tax changes…