U.S. tax law favored index-futures arbitrage with low long-term-capital-gain rates.

Evidence

The arbitrage’s profitability was enhanced by a quirk of U.S. tax law, which meant that 60 percent of profits on futures were treated as long-term capital gains, “regardless of how long you hold them” (Weinberger interview). — Donald MacKenzie, An Engine, Not a Camera, 1571

Categorization

• XREF: Connects to the arbitrage chapter’s causal story about how tax-code details, not just market logic, made index arbitrage profitable. — connects to: The tax code taxes investment income at a lower rate than wage income — Dorothy A. Brown, The Whiteness of Wealth: How the Tax…, 435

Broader Connections

• The tax code taxes investment income at a lower rate than wage income #expands (0.85) — Dorothy A. Brown, The Whiteness of Wealth, 435