White House Expects to Raise over $10b in Revenue under New Crypto Tax Rules

On Monday, The Biden Administration released its budget plan for the fiscal year of 2023. The budget proposal, which totals $5.8 trillion with a $1.15 trillion deficit, features some hints on the administration’s long-term plans for cryptocurrency.

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The budget plan proposes modernizing rules for digital assets through expanding tax reporting requirements. The expansion of the crypto tax rules would enable the White House to bring in over $10 billion in new revenue over the next decade. The proposed federal budget expects about $5 billion in additional revenue in 2023 alone.

The projected tax revenue is based on proposals to revise rules related to digital assets. The bulk of the additional revenue would come from a proposal seeking to extend “mark-to-market” rules to more digital assets. This could mean that cryptocurrencies that appreciate prices might be taxed regardless of whether they make sales or not.

The plan is part of the Biden administration’s effort to reduce the national deficit by more than $1 trillion over the next decade.

The Biden budget also seeks an additional $52 million in funding for the Department of Justice to hire more agents and acquire analytical capabilities as part of the administration’s commitment to counter cyber threats, including boosting programs to combat the misuse of crypto coins.

Major Step for Crypto Use

Earlier this month, President Biden issued an executive order that confirmed the importance of cryptocurrencies while stressing the need to protect the financial system as well as consumers and investors.

The executive order is a call to action rather than a specific game plan. It highlights a series of non-controversial policy statements, such as the need to protect US consumers, investors, and businesses and support technological advances that promote responsible use and development of digital assets.

The administration seeks to strike the right balance between the positives of cryptocurrency —financial inclusion, efficiency, American leadership in global finance— and its negatives: regulatory arbitrage, potential business and consumer abuse, and illicit financing.

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UK Budget Avoids Tax Hikes for Bitcoin Gains

Key Takeaways

  • UK’s Finance Chancellor said economic recovery will be slow through 2021.
  • The government will continue to support the “furlough scheme” and grants until September.
  • No change in tax rates eased the hike fears among England’s crypto and stock investors.

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U.K.’s finance minister Rishi Sunak has announced a generous budget to steer the economy through the COVID-19 crisis. The capital gains tax rates were unchanged, easing fears of a tax hike among crypto investors.

UK Budget Delays Tax Hike

Rishi Sunak said that he would do “whatever it takes” to support the economy in the crisis and begin fixing public finance in terms of debt.

The budget deficit, the difference between the government’s earnings and borrowings, for the last year soared above $377 billion (£270 billion). These figures are the highest since world war II. The government’s debt from the central bank has seen an unprecedented increase in money printing. 

After inflation woes, Bitcoin and crypto investors’ concerns revolved around a potential hike in the capital gain tax (CGT) rate. However, the British finance minister has kept the CGT rates—10% for taxable income below $69,874.00 (£50,000) and 20% for higher amounts—and other income tax and VAT rates as it is.  

The corporate tax will be increased from 19% to 25% in 2023.

Sunak announced a freeze in the income tax threshold to current levels for 2021, keeping the personal allowance to $17468.50 (£12,500) this year, and announced an increase of $27,95 (£20) to $17,570 (£12,570) for the next five years.

British citizens looking forward to extending the $24.1 per week Universal Credit for another six months were not disappointed. The government will continue to fund the furlough scheme to support employees and public grants till September.

The finance minister predicts in the UK budget announcement that the nation’s economy would return to pre-crisis levels by mid-2022.

Disclosure: The author held Bitcoin at the time of press. 

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