Simple concept. You take away many investors incentive to hold stocks for a year, and you get higher market volatility due to the shortening of peoples "investment timeframes". I bet we see ill returns for many big name mutual funds, while hedge funds keep playing the game they play, but with more voracity. It's only going to embolden the American mantra of "I want it all, and I want it now!" It's going to be a very interesting time, very interesting indeed.
How many people actually hold for a year or more these days? I think most traders and investors are used to paying ordinary income on their trading. Secondly, you have to be good enough to make money to pay capital gains, which is a high class problem in itself. The cap gains rate is a non-issue for most traders here.
It will be an issue to every trader here if the once-docile long term dollars start acting like short term money. This WILL add to market volatility, which makes your job as a trader more difficult, whether we like to admit it or not. That's the point I'm making. Remember, the majority of the money in the market is holding a longer term view, I can say this because it's true. Most ET'ers aren't majority shareholders of blue chip companies, so our day to day transactions don't really impact the market to the same degree as a sovereign wealth fund, or state pension fund. This is what I'm speaking of. And to answer your question as to "how many people hold more than a year these days?"...You do, if you have a pension or a 401K