Tax Extenders Act of 2009

Floor Speech

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Ms. ZOE LOFGREN of California. Mr. Speaker, I rise to express my views on H.R. 4213, the American Jobs and Closing Tax Loopholes Act. This is an important bill for our country as we continue to move out of the economic recession. I will be voting in favor of H.R. 4213. However, I have strong reservations about the carried interest tax provisions in this bill and its impact on job growth in areas like Silicon Valley, where innovation and venture capital funds play a key role in the economy.

The American economy gained 290,000 jobs last month, the largest number of job gains in a month since 2006, and the GDP increased by 3 percent last quarter. While these numbers clearly show positive economic growth, the economy has not been recovering fast enough for many families in Santa Clara County where unemployment is still at 11.4 percent--nearly 2 percent higher than the national average.

H.R. 4213 will do much to help California and Silicon Valley families hit by this recession. This bill will provide California with billions of dollars for unemployment benefits, direct assistance to needy families and children, emergency rental assistance, and summer youth programs. I support all of these programs because they will provide a critical lifeline for families trying to keep their heads above water and survive this economic downturn.

These programs will help maintain the short-term stability of the economy, but families in the long-term need jobs the private sector will create. Venture capital investments help create these jobs of the future. This is why I am so concerned about the section in the bill that will increase the tax rate for carried interest as applied to venture capital. Unlike private equity funds, venture capital investments typically span multiple years and funding cycles. It is not uncommon for it to take 10 to 15 years for these ideas to reach the market, and in many cases they never do.

We have all heard of Google, Apple, Cisco, Genentech, and Tesla Motors. All of these companies were at one point just an idea in the minds of their founders. The system of venture capital allowed these ideas to develop and grow into major industries that created hundreds of thousands of jobs.

I applaud House leaders for delaying the implementation of changes to the carried interest tax for a year, but the eventual hit to venture capital investments is worrisome. Just as we are starting to emerge from the "Great Recession'' this seems an inopportune time to overturn the venture capital system that has been an engine of job growth.

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