The Committee on Capital Markets Regulation released a report by Harvard Law School Professor John C. Coates recommending that mutual fund investors who hold less than 2% of a fund’s shares not be taxed on capital gains until they sell those shares. The current tax scheme puts U.S. funds at a competitive disadvantage, Coates says.

While the mutual fund industry in the U.S. is the world’s largest, its growth rate lags behind domestic and foreign competitors, the professor said.

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