Dave Nadig, chief investment officer and research director at ETF Trends, told CNBC’s “ETF Edge” this week that a Senate Democrat’s proposal to eliminate tax breaks for exchange-traded funds was “little. likely to be adopted “.
“I think the chances are pretty slim,” Nadig said in an interview on Monday. “It’s easy to look at him and say, ‘Okay, my God, this is something the rich are taking advantage of. It really is the small investors who benefit the most.
Written by Senate Finance Committee Chairman Ron Wyden, D-Ore., The bill suggests preventing tax breaks on in-kind transactions, which allow ETF managers to exit their positions without trigger capital gains taxes for potential investors. lets sell. This would make ETFs exempt from tax-deferred retirement accounts.
“This puts an ETF and a traditional mutual fund on the same footing, which means there is a taxable event if one has to sell inside the portfolio,” Nadig said.
Although Widen said the program applies to “the wealthiest investor’s taxable accounts,” there are several ways they can get tax benefits outside of ETFs, which “by no means” are their main focus. way to do it. Nadig said.
“It’s very regressive and for that reason I think it’s very unlikely to happen,” he said. “But the reason? Obviously, to try to increase income.