Pethokoukis

Capital gains taxes, high frequency trading, and free-market populism

The great Nicole Gelinas offers an interesting one-two policy combo:

Exchanges and other stock-trading venues favor high-speed, high-volume traders over the little guy or gal, as whistleblowers and congressional investigations have made clear. Stock trading is murky rather than clear: the term “dark pool,” Wall Street shorthand for activity that traders don’t want the public to see, says it all. Events such as the May 2010 “flash crash,” which sent the stock market plummeting 1,000 points within minutes for no real reason, have further harmed confidence.

No wonder nobody wants to take Romney up on his offer of tax-free stock-market gains. To many, that sounds like a sure route to losing money. What to do if you’re the candidate? Romney should couple his tax proposal with a pledge to reform the stock market. He could give a speech saying that he understands that the stock market, the underpinning of American capitalism, is badly dysfunctional, and he should ask why President Obama doesn’t seem bothered by it. He should say that as president, he would make the stock market and other stock-trading venues play by a uniform set of rules—whether they’re dealing with a billion-dollar hedge fund or a worker with $1,000 to invest.

A good example of free-market populism.

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