President Obama has recently proposed new legislation that will allow many venture capitalists to avoid paying hefty amounts of federal income tax. Obama also appears set to back legislation and policy that will attempt to change the longstanding federal definition of a small business as being “independently owned.” He is expected to change this definition to include firms owned by many of the nation’s wealthiest venture capitalists. This new legislation is geared towards the wealthiest venture capitalists and if it is passed billions of dollars a month in federal small business loan contracts will be diverted from legitimate small businesses, and into the hands of mega wealthy venture capitalists.
Some people are viewing this new legislation that calls for a different definition of small businesses and offers tax breaks to venture capitalists as a way for President Obama to assist some of his campaign’s top contributors that are in the venture capitalist industry by saving them billions of dollars in taxes. While it is no secret that Obama has close personal and political ties to venture capitalists, which was demonstrated when he appointed New York venture capitalist, and Tootsie Roll heiress Karen Mills to the head of the Small Business Administration. Also, Obama appointed another venture capitalist, Winslow Sargeant to the head the Small Business Administration Office of Advocacy. This does not necessarily mean that he is only pushing this legislation as a way to give back to the people that helped fund his presidential campaign.
While certainly some of President Obama’s top campaign contributors are venture capitalists I do not believe he is trying to pass this new legislation as a way to save his “buddies” billions in tax revenue. With the current state of the U.S. economy it is becoming increasingly difficult for small business owners to get the loans they need to run or even start their business. By allowing these venture capitalists to save all of this money on taxes will mean that they have that much more to reinvest in other small businesses. Having more venture capitalists looking to loan their money to small, start up businesses is one way that we will be able to stimulate the economy.
I think it is a good idea by President Obama to find another way to get small business loans into the hands of the business owners that need them. Seeking venture capitalists is one of the best ways to get a small business loan when the banks turn you down. Hopefully this new legislation will get passed soon so that these venture capitalists will have more money to lend to small business owners so that we can get our economy back to the way it was.