A Higher Capital Gains Tax Could Move More Investors to ETFs
May 5, 2021
ETFs are often praised for their tax efficiency. With higher capital gains taxes expected, more investors may be moving their money to ETFs.
“The booming ETF industry may be set to lure even more cash in the coming years as rich Americans facing higher capital gains taxes look to limit what they owe Uncle Sam,” a Bloomberg article explained.
“President Joe Biden’s plan to double the rate those making more than $1 million a year pay on investment profits would accelerate a shift that’s already seen hundreds of billions of dollars migrate from mutual funds to exchange-traded funds, market watchers say,” the article said further. “That’s because ETFs are generally more tax efficient, spinning off fewer capital-gain disbursements that for some could soon become a lot more costly.”