US President Biden criticizes Republican budget proposal as a ‘tax loophole for wealthy crypto investors’

$18 billion loophole

U.S. President Joe Biden posted a tweet on Wednesday criticizing the Republican budget proposal, saying it allowed a “tax loophole for wealthy crypto investors” worth 2.4 trillion yen ($18 billion). bottom.

We don’t have to guess what MAGA House Republicans value. pic.twitter.com/BM6JGMEFeq

—President Biden (@POTUS) May 9, 2023

The tweet believes the Biden administration should remove $18 billion worth of “tax loopholes to help wealthy crypto investors” from the federal budget, while “MAGA Republicans” He points out that he believes $200,000 worth of food safety inspections should be cut.

The Biden administration, which calls for an unconditional increase in the federal debt ceiling, and House Republican talks, which require government spending cuts, are in parallel, and no progress has been made yet.

Treasury Secretary Janet Yellen warned on Thursday that the U.S. could default as early as June 1 unless Congress raises the debt ceiling.

The tweets criticizing the Republican Party were issued in such circumstances.

Application of wash sale rules

Biden’s tweet didn’t specifically mention what constitutes a “tax loophole.” However, the budget statement for fiscal year 2024 (October 2023-September 2024) announced in March proposes changes to the taxation method for virtual currencies.

One proposal is to apply a “wash sale rule” to cryptocurrencies, removing the tax deduction for losses incurred when selling the same or similar cryptocurrencies and then quickly buying them back. In the United States, the same rule applies to trading in stocks and bonds.

The Biden administration estimates that the change will generate revenue equivalent to 4.3 trillion yen (about $31.6 billion) over 10 years.

Bloomberg reported on Thursday that individual traders are avoiding “billions of dollars” in taxes by using wash sales to declare losses, citing an analysis by the National Bureau of Economic Research (NBER). .

With increased oversight by the Internal Revenue Service (IRS), including requiring brokers to report cryptocurrency transactions of $10,000 or more, traders are using wash sales, which are permissible for cryptocurrency transactions, to create “legal tax returns.” It is said that it has become clear that it has switched to “avoidance”.

The NBER said that existing tax laws and regulations were not designed to deal with cryptocurrencies. He argued that “oversight and policy clarification on virtual currency taxation” is an urgent issue.

In addition to the above, the Budget also proposes the following changes:

• Information reporting by financial institutions and cryptocurrency brokers
• Virtual currency will also be subject to the mark-to-market taxation system
• Requires U.S. persons with significant assets in non-U.S. cryptocurrency accounts to report their assets to the IRS

connection:US Biden administration’s budget message also proposes changes to virtual currency taxation

Taxation of mining companies

The Biden administration also proposed a Digital Asset Mining Energy (DAME) tax in the 2024 budget. It is asking virtual currency mining companies to bear a tax equivalent to 30% of the electricity bill used for mining.

The DAME tax will be introduced in stages, starting in 2024, at 10% per year over three years, and is expected to reach the target of 30% by the end of 2026.

connection:Biden Administration Proposes 30% Tax on Crypto Mining Companies

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