Venture capitalist Marc Andreessen recently told CNBC that he believed carried interest should be treated as ordinary income, rather than as capital gains. It was his first public statement on the matter, so I figured a follow-up call was in order. Pretty wide-ranging conversation, so let’s do this as non-linear notes:
* Andreessen (speaking for himself, not his firm) believes carried interest is a motivational fee for services. He “doesn’t buy” the industry rationale for categorizing it as a capital gain, even though such treatment is obviously in his own financial interest.
* He declined to extend his support to changing the tax treatment of founder’s equity, which he believes is “the definition of capital gains… and entrepreneur buying stock in his company, even for pennies, and then building the business is completely different than a VC buying stock with someone else’s money.”
* Andreessen historically has backed political candidates of both parties, but in this cycle has donated at least $100,000 to a SuperPAC that supports Mitt Romney (who still refuses to take a position on carried interest). “You do not get a high-end, professional CEO running for president very often.”
* That said, Andreessen’s support of Romney is, so far, limited to the primary. “Romney is better than the Republican alternatives – I’d vote for Obama over Santorum – and I’ll probably go with Romney in the general. But November is still a ways off.”
* What could Obama do to get his vote: “Do some of the things he promised to do during the last campaign, like reforming capital gains for investments held more than five years… In general, I want a principled stand that there are other ways to solve problems than through regulation – which often becomes a sledgehammer that hurts companies that never were part of the original problem.
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