In their excellent piece in Boomberg Businessweek, The ERT Tax Dodge Is Wall Street’s “Dirty Little Secret”, authors Zachary R. Mider, Rachael Evans, Carolina Wilson and Christopher Cannon outline what many qualify as an ETF tax scam while others defend the practice as “smart” and “perfectly legal”.
The practice itself indeed allows ETF’s to avoid taxes through tax free fund transfers in a manner not available to other funds. For example, according to the piece. “The first and largest ETF, State Street’s SPDR S&P 500 ETF, hasn’t reported a taxable gain in 22 years. In contrast, a traditional mutual fund run by Fidelity Investments that tracks the same index had a taxable gain in 10 of those years.”
As many pass it off as no big deal, consider this: “U.S. stock ETFs avoided tax on more than $211 billion in gains last year, according to a Bloomberg Businessweek tally based on annual reports of more than 400 funds.”
Take a look at the engaging piece HERE and then decide: profit-healthy ‘heartbeats’ for ETF funds, or mini-strokes inflicted on the public-at-large by a lack of proper oxygen (taxes)?
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