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May 31, 2010

Sloppy Reporting from The New York Times on Carried Interest Debate

I swore I would go offline for much of Memorial Day Weekend.  But I cheated and peeked at my email late Saturday afternoon and discovered an email from a friend saying, "I'm surprised to see you take such a public stance on the capital gains tax rates," with a link to a New York Times article on the topic.

I read the article in The New York Times on the carried interest debate and was shocked to see my name and a reference to me that read:

"As the Senate Democrats sent signs that they were open to a tax increase, investors and their lobbyists mobilized quickly, warning that the proposal could stifle investments that create jobs.  A group of 80 venture capitalists traveled to Boston to urge Senator John Kerry and Representative Barney Frank, Democrats of Massachusetts, to exclude their business from the tax change, according to Jeffrey Bussgang, a partner at the Boston venture capital firm Flybridge Capital Partners."  

Um...here's the problem.  I never spoke to the reporter, David Kocieniewski, who wrote the article (although I later found a voice mail from him).  Other than the fact that my name and firm name are accurate, nothing else in that sentence is correct.

I guess this is just another example of sloppy reporting, but I expect better from the New York Times.  

Since the reporter never spoke to me, I can only assume that the reporter was referring to a blog post I did regarding a trip to Washington DC (not Boston) with 80 business leaders from Massachusetts regarding an organization I co-chair called the Progressive Business Leader Network (PBLN).  In fact, the trip had nothing to do with carried interest taxes and there were only three or four VCs as part of the business delegation from PBLN.  If he had actually read the blog post, he would have realized that it was a trip with a wide range of topics, including cap and trade, innovation investment, deficit reduction and financial reform.  We did not meet with John Kerry, although I did report that we talked to Barney Frank about financial reform and that he did articulate his own position that venture capital would be exempted from the carried interest tax.

If I had actually been interviewed for the story, I would have given a more nuanced position.

Because of the Bush tax cuts, two wars, and the recent economic crisis, we are facing the worst long-term structural deficit in US history.  If we want to avoid the path of Greece or Spain, we need to act quickly with a blend of (unfortunately) higher taxes and lower spending. The only question is what taxes should go up and what spending should be cut.  

In debating what taxes should be increased, we should take a strategic approach.  Personally, I'm willing to and expect to pay higher taxes.  But having those higher taxes be levied against venture capital investments in small businesses strikes me as self-defeating when it is the single largest job growth area.  I'd personally rather see us put in place a carbon tax and/or a gas tax.  Perhaps we should reduce the mortgage exemption in order to shift incentives away from home ownership (how'd that work out?) towards investment and job creation.

Anyway, that's what I would have said if I had actually been interviewed by the New York Times.  Next time, I hope they either actually get my point of view, or leave me out of it and let me enjoy my Memorial Day weekend.

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Wow, that sucks. Yes, I'd expect better from the Times and a number of other "top shelf" publications that aught to be able to get their facts right, whatever their opinions might be.

As for the 'cut spending', I'm saddened that I've not seen in the States any mention of the "bitter pill" that the Irish have already taken; In the public sector, rather than cutting staff (teachers, police, etc) like we're starting to see here in the states (Brockton just let go 430 teachers!!), in Ireland, they have kept the needed staff (I'd say teachers are needed!!) but they have cut the salary and benefits of the workers (over 20 % in many cased.) I guess a "blend" of pay cuts and staff cuts is probably best, not just all staff cuts like we're seeing here.

In debating what taxes should be increased, we should take a strategic approach. ;)

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