You can't get (reasonably) a futures contract that goes out longer than a year, hence you cannot get to the stated long term rates. Tax them as any other instrument and liquidy dissapears.
You are assuming that futures are indistinguishable from other asset classes and therefore should be taxed exactly the same. Obviously, Rep. Dan Rostenkowski, the former Chairman of the Ways and Means Committee, saw a distinction that has escaped you when he wrote the law granting his hometown industry a special tax break.
Clearly, taxing short-term stock trades as ordinary income has not hurt liquidity in stocks, has it? And I don't think it hurt real estate investment liquidity during the bubble years either.
The distinction that Danny Boy saw was a chance to give his friends in Chicago a bone after new tax laws closed old loopholes, like tax straddles! I will eagerly take advantage of the 60/40 mark to market acccounting with my ES and NQ profits until that special loophole is cleared. That said, it is unfair that futures get special treatment, but whoever said life was fair?
Whoever said it was "UNFAIR" ? We all win some and we all lose some. I hardly think any profitable futures trader will run like a scalded rabbit if the tax treatment is changed. Futures markets took off as trading vehicals when the "AG" exchanges brought on new financial instruments. Leo Melomed fashioned the modern exchanges not Dan "Rosty" This was from 1991. http://www.leomelamed.com/essays/91-lndn.htm But with all that we still have 90% losers, my, my, computers change the landscape but they still have not chnaged the person clicking the mouse. Taxes be dammed..........just play the game.
Trading ...work? That cracks me up. Investing maybe has some merit but trading is the equivalent of playing a video game all day. If your incentive to trade were taken you might do something productive like become a school crossing guard.
anything that has me sitting in front of a computer all day instead of skiing or windsurfing, is work. i have never played a video game, but that would be work for me also. Probably wouldn't even have a computer if not for trading. That is why i bought my first one back in '87. had less ram than a watch today! trading does serve a very important service BTW. its called liquidity. markets would not function well without it.
Most traders end up losing anyway, so in the end, the issue of changing the 60/40 is a moot point--it will change nothing. I guess my view of the whole issue is mixed: I like the 60/40, because it saves me money, but it is a rather silly privilege. Most futures traders end up losers anyway, so there is no need to provide any incentive so people become futures traders, yet without that extra "liquidity" provided, it would be hard to make a living.
I'll quote this post since smilinsynic has you on ignore. I'll add that the spirit of the law was not to tax hedgers. The futures markets were born out of the necesity to hedge and lawmakers felt one should not be taxed on any profits incurred from a hedge since the tax would usually be collected from the gain on the product that was being hedged. Talk about double taxation. Tax an airline on their ticket revenues then tax them when they go to hedge their fuel costs. Yeah, that makes total sense. By this backass logic, we should also pay capital gains on our car and house insurance if we ever receive a settlement.
I LOVE being hated Mav. Especially by creepy liberals. And I'm on a mission. Destroy them. These proposed tax hikes are on the verge of flat out confiscatory. Taxation is a moral and human rights issue. How much of your sweat and in the case of trading-sweat and capital-how much of a tribute is too much? Taxing a guy who's income is derived throgh monetary risk at the same rate as an A-Rod wage earner is ludicrous. It's just ROI and the I part was already taxed. We've both traded too long to not know-it's winnings rather than income. Winnings need to be saved because winnings are elusive. Fuck Congress. Fuck Obama. Fuck ANYONE who thinks I should pay 1 more cent in total taxes. Between property taxes, income tax, self employment on trader-ed stuff, excise taxes, gas taxes, sales taxes, sin taxes- it's a never ending expensive expense. It needs to stop. And before this turns super off topic-any one who thinks the Defense budget will be 1 penny less under Obama than Bush/McCain is a stupid pos. Obama for all you know is FDR and we'll be fighting Pakistan in two years. In any case the reason for higher taxes won't ultimately be because of Bush. It'll be because of this Congress. Obama can run on a "modest" tax hike platform knowing full well that the Dem majority can FORCE higher rates. Obama will assuredly agree.