Larry Fink, the CEO of Blackrock (the investment company) had an idea to reduce the chances of future financial crises like the one we are coming out of that does not involve more regulation. He suggested eliminating the tax on really long term capital gains (> 5 years) and balancing it with an increase in short term (< 1 year) capital gains and dividends. This would incent people on the long term investments that really benefit the economy while disincenting the short term trading that was part of the problem. Because its not a regulatory solution, it avoids the frictional costs and externalities that usually accompany regulations. It also may be possible to sell, even though there is a tax hike (oh no, not that!!!) inside, because it is balanced and it is clearly related to the emergency.
I think this is a great idea. Hopefully the pols in DC were listening.
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