A senior tax writer in the Senate is “alarmed” by the growth of a lucrative market for a “tax aware” investment strategy, characterizing the arrangements as ripe for abuse.

A revamped form of “long-short investing” aimed at generating losses represents “aggressive, abusive tax avoidance,” and Treasury should move to curb it, Senate Finance ranking member Ron Wyden (D-Ore.) argues in a new letter dated Wednesday. The letter signals a possible area of investigation interest for the tax writer if Democrats retake the Senate as the party blames the wealthy for the affordability crisis.

Using an investment model popularized by the …