Tax Treatment of Short-Term Trading : Scheduled for a Hearing Before the Senate Committee On Finance, On March 21, 1990 Jcs-8-90
Tax Treatment of Short-Term Trading : Scheduled for a Hearing Before the Senate Committee On Finance, On March 21, 1990 Jcs-8-90
United States. Congress. Joint Committee On Taxation
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Defenders of the efficient capital markets theory note that subse- quent studies have questioned the statistical validity of the excess volatility view. They also argue that the so-called short-term port- folio insurance strategies which some blame for the crash of 1987 were generally only a United States phenomenon, and yet other markets fell significantly as well. They further assert that much of the crash could be explained by market fundamentals. ^ 2 Proponents of the efficient markets view... state that any tax which either drives a wedge between market values and fundamen- tal values, or which seeks to drive arbitrageurs and speculators from the market ultimately will harm the allocation of capital in the economy. They claim such taxes will slow the market's signal- ling function. They further note that a tax on the income from short-term trading will encourage investors to remain locked in to their investments. This creates capital market inefficiencies by dis- couraging investors form redeploying their funds to potentially more profitable investments.
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