According to U.Today, the online cryptocurrency community is abuzz with discussions about a rumored 1% wealth tax on large Bitcoin holders, often referred to as 'whales'. This speculation has been fueled by a recent letter, allegedly signed by Senator Elizabeth Warren, sent to US President Joe Biden. However, there is no official confirmation of such a policy.
The purported legislative proposal aims to address regulatory challenges arising from the increasing adoption of cryptocurrencies. It suggests that individuals or corporations holding cryptocurrencies valued at over $1,000 should report these holdings to the Internal Revenue Service (IRS) annually. Moreover, the proposal advocates for a 1% wealth tax on entities holding digital assets worth more than $500,000.
Some members of the crypto community believe that this proposed 1% tax could be a government strategy to regulate the market and prevent large holders from manipulating Bitcoin prices. However, the authenticity of the bill, which has been dismissed as false, is intended to address growing wealth disparities in the United States. The proposal suggests that individuals and entities with significant crypto wealth should contribute to public services and investments.
Cryptocurrencies are classified as capital assets by the IRS in the U.S. Therefore, any gains or losses from buying, selling, or exchanging cryptocurrencies are treated as capital gains or losses. In 2021, the Biden administration proposed a tax plan to increase the capital gains tax rate to 43.4% for citizens earning over $1 million. This proposal faced significant backlash, with venture capitalist Tim Draper arguing that it could harm 'the golden goose that is America'.
