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Security Traders Association Opposes Proposed Modernization of Derivatives Act – Lexology

In a letter dated September 17, 2021, addressed to Senate Committee on Finance Chair Ron Wyden and ranking member Michael Crapo, the Security Traders Association (“STA”) highlighted the negative impact proposed legislation on derivatives would have on investors. The Modernization of Derivatives Tax Act of 2021 (“MODA”) would create a single tax regime for all derivatives, which would require mark-to-market treatment, source gains and losses to the taxpayer’s country of residence, and tax derivatives at ordinary income rates. The STA warned that the legislation would have the effect of reducing liquidity in the U.S. equity market.

In addition to MODA, Senator Wyden recently released draft legislation on a number of tax issues, including proposals to expand the pass-through deduction, limit “Mega-IRAs”, increase carried interest rates, and reform partnership taxation. (See linked Cadwalader summaries).