May 5, 2009
If you limit short selling and thus reduce the capital gains some traders earn each year, the Federal Government will collect less tax from those individuals.
As long as someone is willing to take the opposite side of a short sale, the Federal Government has no business interfering.
You're not considering a "downtick rule" as well are you? Under your proposed logic you might as well force people who want to be long a stock to to buy on a down tick.