[LenS]

The problem with repealing or enlarging the $3,000 is that it would encourage (in the short term at least) people to sell off stocks that are down for the tax benefit. It could have an effect similar to massive short selling of certain stocks. In other words, stocks that are down could be pushed further down as people decide to save on taxes now instead of waiting for either gains elsewhere to offset or for the down stocks to recover. In the current market, you don't want to encourage selling.

Perhaps, over time the $3,000 amount could be increased (or at least indexed to inflation) so there's no sudden push to sell.

[TheCPA]

True, people with losses would be motivated to sell. However, for every seller there is a buyer. Any tax loss selling should be a short-term phenomenon. In addtion, the tax savings would free up additional capital for investment. Also, most capital gains are the result of trading in the secondary market. When someone buys stock from someone else, business receives no new capital. To stimulate the economy, we need new capital investment from the formation of new companies. Repealing the $3,000 annual limit on deductibility of net captial losses should help to stimulate capital formation.