As the White House and Congress wrangle over raising the debt ceiling and reducing the federal deficit, tax loopholes would seem to be an easy target for compromise.
President Obama has talked about eliminating breaks for partners at hedge funds and private equity firms — along with corporate jet owners, oil companies and others taking advantage of quirks in the tax codes.
Here’s another little-known group of tax code beneficiaries that he might want to add to the list: day traders and speculators who buy and sell futures contracts.
For years, futures contracts, which are essentially bets on the price of commodities, stock indexes and the like, have received a more favorable tax treatment than stocks. A trader who buys and sells an oil contract in less than a year — even in a matter of minutes — pays no more than a 23 percent tax on the profits.
Compare that with the bill for flipping shares of Google, General Electric or even a diversified mutual fund in the same time period. Those short-term investment gains are treated like ordinary income, meaning the rate can run as high as 35 percent.
“There are so many ways to attack the logic of it,” Warren E. Buffett, the chairman of Berkshire Hathaway, said in an interview on Monday about of the futures tax break. “It doesn’t make sense.”
Read more - http://dealbook.nytimes.com/2011/07/11/an-addition-to-the-list-of-tax-loopholes/?emc=eta1
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