Senate Finance Committee Chairman Ron Wyden has proposed a new tax on exchange-traded funds’ in-kind transactions.
Senate Finance Committee Chairman Ron Wyden, D-Ore., has floated a new levy on exchange-traded funds to help pay for the Democrats’ $3.5 trillion budget package. Exchange-traded funds, or ETFs, are baskets of assets — such as stocks or bonds — and can be bought or sold throughout the day like stock. While everyday investors don’t directly own the shares, a fund manager may buy or sell the underlying assets to financial institutions. Regular investors typically avoid taxes while owning the fund because financial institutions can swap the underlying assets for others, known as an «in-kind» trade, which doesn’t trigger capital gains. Wyden has called for ending the tax break for these in-kind transactions, according to the proposal, which may affect all investors across the $6.
