Increase the tax on short-term capital gains and eliminate stock options to limit short-termism.
Short-term capital needs--as in, assets likely to be expensed or converted to cash within one year.
Instead, most hope that controls on short-term capital flows might make them less volatile.
Mr Eichengreen, for instance, wants emerging economies to discourage short-term capital inflows to minimise exchange-rate volatility.
Chile was trying to deter short-term capital inflows in the early 1990s, for example.
In 1991 Chile imposed an implicit tax on inflows of short-term capital to reduce the aggregate inflow.
The remaining 40 percent is subject to short-term capital gains rates the higher ordinary income tax rates.
If you sell before a year has passed, you will be subject to the short-term capital gains rate.
Similarly, long-term capital losses are first applied against long-term capital gains, with any excess applied against short-term capital gains.
Short-term capital losses must first be used to offset short-term capital gains.
If there are net short-term capital losses, they are then used as an offset against the net long-term capital gains.
To prevent volatile currency swings, he argues, governments should impose a tax on short-term capital flows especially short-term bank loans.
Harvesting your losses is most beneficial when you can write long-term losses off against either short-term capital gains or ordinary income.
WSJ: The Intelligent Investor: The Hazards of Tax-Loss Harvesting
Short-term capital gains (meaning gains on assets held for less than a year) are taxed at ordinary income tax rates of up to 35%.
They have freed their exchange rates, avoided a dependence on short-term capital flows and steered clear of running up massive current-account deficits.
IMF, point favourably to Chile as a country whose financial stability may come, in part, from its restrictions on short-term capital inflows.
Paradoxically, that is tribute to Mexico's new-found economic stability: it has been a haven for short-term capital fleeing problems in Argentina and Brazil.
That is partly because investors fled emerging markets but also because of government intervention, in the form of taxes on short-term capital inflows.
For instance, the official position on short-term capital inflows to financially fragile countries is merely to allow holding-period taxes, not to encourage them.
On the other hand, you should accelerate ordinary income or short-term capital gains into 1999, because these will be subject to the lower AMT rate.
However, economists disagree about the effectiveness of Chile's short-term capital controls.
Premiums pocketed from expired options are considered short-term capital gain (never mind how long you hold the position), and that gain could be taxed at high rates.
The reason seems to be that Chileans agree more with Mr Stiglitz: they worry about the turbulent impact of short-term capital flows even in their well managed economy.
ECONOMIST: Can capital controls stop poor countries crashing?
But Colgate is looking like a better short-term capital appreciation play based on the charts appearing to be in much better shape because the stock has lagged the broader advance.
But - as I have written before - success has brought its own problems, including a rising exchange rate and a lot of short-term capital inflows of the kind that makes finance ministers nervous.
To claim a nonbusiness bad debt, you report it as a short-term capital loss subject to the capital loss limitations on a federal form 8949 (downloads as a pdf) in the year the debt becomes worthless.
Finally, in the event that your new investments skyrocket in value (in excess of your capital losses), you will have to wait a year to sell or be stuck with higher-taxed short-term capital gains next year. (You should be so lucky).
Malaysia has only recently started to shed a questionable reputation it acquired after former prime minister Mahathir Mohamad tried to stop money from leaving the country during the Asian financial crisis in 1997 by imposing short-term capital controls.
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