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Donald Trump. (Via Shutterstock)
Donald Trump. (Via Shutterstock)

Before Donald Trump even finished his economic speech in Detroit on Monday — in which he called Hillary Clinton and Barack Obama a “disaster” — the National Venture Capital Association came out swinging, noting that the Republican presidential candidate’s policies related to “carried interest” would severely damage the entrepreneurial ecosystem in the U.S.

Interestingly, this is one area where both Trump and Clinton are in alignment. Bloomberg News noted that carried interest for hedge funds and venture capital firms is taxed like capital gains for as little as 23.8 percent, and that Trump wants them taxed as ordinary income. Under Trump’s tax plan, which would reduce the corporate and business taxes to 15 percent, some partnerships which received carried interest could see a decline in their tax bill, according to Bloomberg.

Even so, Bobby Franklin, President and CEO of the National Venture Capital Association, issued this statement on Monday about Trump’s proposal:

“Donald’s Trump call for the elimination of carried interest demonstrates an unfortunate misunderstanding of the critical role it has played in the growth of 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. 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. Rather than continue to toss around the proverbial political football to raise taxes on new company creation, let’s instead discuss ways we can encourage entrepreneurship and innovation by rewriting rules in the code which hurt or ignore startups.”

Last month, we asked several Seattle area venture capitalists what they thought about Trump and his policies for the innovation economy. Most thought he’d be a disaster.

“Voting for Trump is a very bad idea for our country and industry,” said Todd Warren, managing director at Divergent Ventures.

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