US Treasury Secretary Janet Yellen announced a proposal for a new tax that could target unrealized capital gains. Speaking to CNN's State of the Union on Oct. 24, Secretary Yellen said he was looking into new taxes that would affect the richest.
However, part of the proposals included a tax that could be applied to unrealized capital gains. This means that holders of cryptocurrencies or stocks could be taxed on the increases before they have even sold the assets. It could also mean that property price appreciation could be taxed even before the property has been sold.
“What is under consideration is a proposal that Senator Wyden and the Senate Finance Committee have examined that would impose a tax on unrealized capital gains… on liquid assets held by extremely wealthy, billionaire individuals. I wouldn't call it a wealth tax ”.
He added that wealthy individuals often evade taxes until they are realized and this would be well on their way to targeting their properties. It was unclear whether the proposed new tax would apply to all holders of liquid assets or only to those above a certain threshold.
Tax rich cryptocurrency holders
The move didn't go very well within the crypto community. Earnings are often unrealized until the assets are liquidated and the fiat has been withdrawn. The new tax could have a major impact on those who hold only a few BTC at current prices.
Outspoken cryptocurrency critic Mr. Whale commented, “The fact that Janet Yellen is also considering an unrealized capital gains tax perfectly illustrates the monstrous economic crisis we are in. They are willing to annihilate all investor sentiments to raise funds to finance their reckless madness ”.
Many also wondered how the proposed new tax regime would affect unrealized losses. This is when the asset is worth less than the purchase price but has yet to be sold.
The baby and the bathwater
Anti-crypto and banking Senator Elizabeth Warren also said she was "pushing hard" to use a tax on the rich to help fund President Biden's Build Back Better agenda. On Sunday, he said the Americans get it, adding, “They understand the system is rigged. Teachers, nurses and firefighters are just tired of paying more taxes than Jeff Bezos pays ”.
Taxing billionaires is highly commendable, but US lawmakers must be careful not to throw the baby out with the bathwater. This is essentially what a new tax on investment profits that have not yet been made would actually do.
Before they even tax the air we breathe, do you want to invest in cryptocurrencies? Then you can do it via the website Bitcoin system.
