The National Venture Capital Association took aim at Donald Trump’s plan to end the special tax treatment for carried interest, saying Monday the Republican presidential candidate misunderstood the role it played in the U.S. entrepreneurial ecosystem.
“Despite the populist uproar, carried interest has been an important feature of the tax code that properly aligns the long-term interests of investors and entrepreneurs to build great companies together, and is only realized after our country receives the benefit of greater economic activity,” NVCA President Bobby Franklin said in a statement.
“Far from being a so-called ‘loophole,’ the carried interest venture investors receive is similar to stock awards received by the founders of a startup in that both the venture investors and founders commit the time, energy and creativity against huge risks to build new startups into successful companies,” the statement read.
The trade group called for discussions on ways to encourage entrepreneurship and innovation by rewriting rules in the code instead of using carried interest as a political football.
Trump addressed the Detroit Economic Club on Monday, laying out his tax and economic priorities if elected president.