The Tax Idea That's Scaring ETF Investors
IRS headquarters in Washington, D.C.
Photographer: Samuel Corum/BloombergThis article is for subscribers only.
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Exchange-traded funds have a special super power: tax efficiency. Investors pay taxes when they sell, but not when others in the fund sell. Yet that super power is suddenly in jeopardy. A recent bill proposed by Senate Finance Committee Chair Ron Wyden (D-Ore) would repeal a tiny section in the tax code that allows for ETF's in-kind creations and redemptions to be non-taxable events.