A longtime critic of exchange-traded funds (ETF)’s tax benefits, Fordham Law Professor Jeffrey Colon spoke with Bloomberg Law about how wealthy investors are using a clever ETF trick to legally sidestep U.S. capital gains taxes—and why that raises concerns.
To critics, the growth of these conversions is a sign that ETFs’ tax advantages — while perfectly legal — are now being exploited at a scale that’s increasingly incompatible with a system meant to tax investments when they are sold.
“At the end of the day, we really will have been able to diversify our portfolios from high-tech stock to foreign stock, for example, from stocks to bonds without tax — and to me that’s a big issue,” says Jeffrey Colon, a law professor at Fordham University who’s been a longtime critic of ETFs’ tax benefits. “We shouldn’t have these vehicles out there that are just black holes for capital gains.”
Read “‘Black Holes for Capital Gains’: New Tax Trick Takes Off in ETFs” in Bloomberg Law.