Verb is not HAVE, it is would have.

According to some analysts, whatever its merits, the proposal to tax away all capital gains on short-term investments would, if enacted, have a disastrous effect on Wall Street trading and employment.

it can be rephrase as:

According to some analysts, whatever its merits, the proposal to X would have a disastrous effect on Y.

I have only confusion, can we assume that
its ==> proposal's

i can easily eliminate C,D, and E.

now come down to idiom:
proposal to
or
proposal of

so A or B will be the answer. preferably A, but i see no problem with B as well.
==> 'its' is so weird in both.

Whats the issue with B..............is it the use of may?
ideally it should be "might"

I agree with Sunny's analysis: the complete predicate is "would have" and the subject is "proposal"
B is eliminated because the idiom is "proposal to do something" rather than "proposal of doing something"; also "may be" is not needed so B is wordier

Pls help,

the idiom is "whatever noun" or "whatever noun maybe",????
pls, help