U.S. President Joe Biden released his official 2024 budget plan this Thursday – and cryptocurrency transactions are in its crosshairs.
His many proposals include subjecting crypto to the same wash sale rules as stocks and bonds, while also raising capital gains taxes for the wealthiest Americans.
Biden’s Budget Plan
The plan, according to the White House, will help cut budget deficits over the coming decade by $3 trillion through an array of business tax hikes and government spending cuts, despite a higher-than-expected defense budget of $835 billion.
Some of the administration’s tax priorities include quadrupling taxes on stock buybacks from 1% to 4%. Meanwhile, capital gains will be taxed at the same rate as wage income for those making over $1 million per year.
The plan would also close the “like-kind exchange” loophole whereby crypto traders can sell their underwater crypto investments, claim a deductible loss, and immediately repurchase their tokens. Estimates from the Wall Street Journal suggest this could shore up $24 billion for the government.
The budget seeks to reverse many of the tax changes implemented by the Trump administration, which cut effective tax rates for corporations to under 10%.
“The Budget would set the corporate tax rate at 28 percent, still well below the 35 percent rate that prevailed prior to the 2017 tax law,” wrote Biden. “This tax rate change is complemented by other proposals to incentivize job creation and investment in the United States and ensure large corporations pay their fair share.”
The President stays committed to not implementing any tax changes affecting those making less than $400,000 per year.
The administration claims its plan will stabilize the budget deficit at around 5% of GDP, as opposed to 6% without the President’s policies. Last month, Trump Administration VP Mike Pence suggested that persistent deficits are putting the United States on course for a debt crisis over the next several decades.
Problems With Taxing Bitcoin
In 2021, Biden’s infrastructure bill introduced a controversial policy to expand tax reporting requirements for cryptocurrency “brokers,” whose loose definition could technically apply to miners, validators, and developers. Crypto-supportive senators including Pat Toomey and Cynthia Lummis have promised to see that language revised at a later date.
In drafted legislation, Lummis also recommended excluding Bitcoin transactions of under $200 from being subject to capital gains taxes, to better enable its use as a form of currency.
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