Pension funds and other tax-exempt institutions would be required to pay taxes on gains from their investments in oil and gas commodities under legislation introduced by Sen. Ron Wyden, D-Ore.
The bill would also require speculators such as hedge funds to pay ordinary taxes on investments in energy commodities, rather than the current lower rate applicable to capital gains.
The legislation “would end the free ride that institutional investors get on profits made from the high prices of oil and natural gas — prices that have been driven higher by the high volume of institutional investment,” said a summary of the legislation issued by Mr. Wyden.
Separately, Michael W. Masters, managing member at hedge fund Masters Capital Management, urged the CFTC to ban all investors from making passive investments in commodity derivatives markets.
“Passive investment provides no benefits to the markets while it exacts a heavy toll” in driving up commodity prices, Mr. Masters said in prepared testimony.
In a statement at the hearing, Gary Gensler, CFTC chairman, said he believed the agency had to seriously consider position limits for energy markets. Public comment on whether the CFTC should adopt limits will be accepted until Aug. 12.