Industry Opposes Tax Proposals

Industry groups are coming out against a provision in draft legislation from the U.S. Senate Finance Committee that seeks to repeal a section of the tax code that would change the tax treatment of in-kind redemptions by ETFs and mutual funds. ETFs are able to avoid taxes with in-kind transactions due to a tax exemption that was created for mutual funds. Industry observers, such as the ICI, say the change will hurt regular investors striving to build financial security by making it more expensive for working families to invest for the long term and would also make regulated investments less attractive to younger Americans. According to a report in the Wall Street Journal, the tax proposal has yet to make its way into any formal legislative plan. In a statement, SIFMA argued that current proposals to raise taxes on capital gains and dividends, change the derivatives tax regime, restrict the ability of individual retirement accounts (IRAs) to invest in alternative investments, and change the tax treatment for ETFs all directly impact Americans working to build savings and to have a successful retirement. “We urge Congress to carefully consider the real-world impact on everyday savers and move away from these tax hikes.” A report in Barron’s describes the various tax proposals floating in the Congress that could affect the industry.