On March 9, 2023, the Biden administration will release its fiscal 2024 budget proposal. The proposal aims to reduce the federal budget deficit by $3 trillion over the next decade and includes plans to modify how cryptocurrency is taxed, with the goal of raising approximately $24 billion.
The administration claims that bitcoin and cryptocurrency transactions are not governed by the same wash-sale regulations that apply to stocks and bonds. Consequently, investors in underwater cryptocurrencies can sell their holdings, deduct the loss from their taxes, and reinvest the proceeds immediately.
Digital assets are currently exempt from wash-sale rules because they are not yet classified as securities, but the government aims to change this and stop the practice.
The proposal has sparked reactions in the crypto community, with some viewing it as an attack on the development of digital assets, especially in the crypto space. Others suggest that the move is an attempt to hinder further development of digital assets in anticipation of the fast development of crypto in the country.
the higher the #Crypto tax day, maybe this is due to the faster #Crypto development, maybe this tax increase is to hinder the current #crypto development
— Cryptoiz Research 🇮🇩🇮🇩 (@cryptoiz_IDN) March 9, 2023
This is not the first time that government agencies have taken similar actions. The US SEC has been actively working to classify digital assets as securities in order to have more control over them. The US SEC’s recent regulatory moves in the country’s bitcoin industry corroborates this stance.
The budget proposal also includes plans to raise income levies on corporations and wealthy Americans, with a call for a 25% minimum tax on billionaires included in President Biden’s request to Congress. The budget also proposes nearly doubling the capital gain tax rates for investors making at least $1 million, with a new tax rate of 39.6% on long-term investments, up from the current rate of 20%. Crypto firms and investors are among the firms whose taxes will be raised.
The President’s proposed budget also outlines strategies to save hundreds of billions of dollars by reducing prescription prices, raising some company taxes, cracking down on fraud, and reducing unnecessary expenditures.
President Biden’s 2024 budget plan will seek to save hundreds of billions of dollars by lowering drug prices and raising some business taxes https://t.co/oKDdy8h5cG
— The Wall Street Journal (@WSJ) March 8, 2023
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