Will proposals to tax unrealized capital gains kill Bitcoin and other Cryptos?

[amishmanish]

but the problem with this method of taxation is that if they start it with bitcoin then they have to tax everything else that is similar to bitcoin. if you have anything that gains value then you end up being forced to pay taxes on it and since you won't be able to comply you'll have to sell all your belongings to be able to pay those taxes.
that simply can not happen. not to mention that putting a price on something that is not yet sold is not possible.

what will happen (or rather continue to happen) is that whenever that property is converted to fiat and the profit is calculated, then you'll have to pay the tax on that sale.

Someone explained that this was an old proposal which never actually made it to even a bill. This sounds pretty much a mad plan. People would stop buying real estate, stocks and would basically stop owning ANYTHING, lest they need to pay taxes.
This would still align with another radical vision about a future when everything will be rented and nothing will be owned by the people. They are all pretty happy working and earning paychecks while everything has become a "service". I doubt any government can ever implement something like this without having a total revolution of sorts.

[1714222894]

1714222894

[1714222894]

1714222894

[1714222894]

1714222894

[slapper]

This is a Hot Potato for many years. People try to put a tax on bitcoin so as not to let people have advantages from the decentralization. Well, the most painful thing is that they do not recognize bitcoin in the ways we want but they just want to steal more money from us

It is not a big issue though if you know how to bypass the centralized system. There are several ways to buy bitcoin in the black market as well as different sources. IN my country, it is hard to trace back people who buy bitcoin since we go through many layers of the market before receiving money/bitcoin

[jaysabi]

People will not have an incentive to HODL if they have to pay taxes on unrealized BTC capital gains yearly. They would have to sell to pay the taxes. This will not be a good development for Bitcoin and others imo. What do you think?

www(dot)wsj.com/articles/top-democrat-proposes-annual-tax-on-unrealized-capital-gains-11554217383

WASHINGTON—The top Democrat on the Senate’s tax-writing committee proposed taxing unrealized gains in investment assets every year at the same rates as other income, offering an idea that would transform how the U.S. taxes the wealthiest people.

The proposal from Sen. Ron Wyden of Oregon is the latest plan from Democratic lawmakers and presidential candidates for boosting taxes on the wealthy to address economic inequality and provide funding for their policy agenda. While this specific proposal has little chance of becoming law soon, such ideas could quickly gain momentum if the party succeeds in next year’s elections.

Under Mr. Wyden’s concept, capital gains would be taxed annually based on how much assets have gained in value. Now, by contrast, gains are taxed only when assets are sold and at a top rate of 23.8% instead of 37% for ordinary income.

“It would be a huge change,” said Lily Batchelder, who was a tax-policy aide to President Obama. “It would be a really big shift in our income-tax system.”

It would be bad for all investment classes, not just crypto.  However, the way the tax code is now where you can defer taxes for decades (or entirely through estate planning) is not sustainable and the rich have absolutely raped the wealth of the nation as a whole by exploiting the tax loopholes in the system to never pay their fair share.

Realistically, taxing unrealized gains isn't going to get passed, not for crypto, not for stocks.  Not only because it will necessitate asset liquidations which will drive asset prices down, but because the rich don't want to pay more taxes and they get what they want.

[darewaller]

Now, by contrast, gains are taxed only when assets are sold and at a top rate of 23.8% instead of 37% for ordinary income.

Jesus fuckin' Christ....that's the way it should be.  You haven't actually realized a profit until you've sold, and nobody should have to pay the government just because something they own went up in value.  Would this include real estate?  Stocks? 

This democratic idea is so asinine that I hope it just dies on the floor.  If the government truly wants to address income inequality (not a new problem, by the way), this is about the worst way of going about it that I could think of.

I bet you this is their plan to pay for all of this stimulus money that's being handed out like monopoly notes.  I'll have to keep an eye on this.  Thanks for posting this, OP.

Do not be worried, it is still like that in the current system and it will still be like that for crypto in the future as well, this is just "lets say something bad about democrats". We all know that Republicans will not care about anything but money, when you look at their defense of Trump all they say is there is "record breaking low unemployment" which somehow they believed when told during a freaking pandemic, obviously that is a lie but they care about that, when you point out to the record breaking debt they ignore it.

This is also another situation where wealthy people buy and hold same stocks for decades and get richer thanks to that, for example Jeff Bezos and Elon Musk got so so so much richer this year, you think not paying a single cent for that is understandable? I think that is not acceptable, so this will make sure there is tax payments for those people who got billions of dollars richer by simply holding stocks.

[jaysabi]

but the problem with this method of taxation is that if they start it with bitcoin then they have to tax everything else that is similar to bitcoin. if you have anything that gains value then you end up being forced to pay taxes on it and since you won't be able to comply you'll have to sell all your belongings to be able to pay those taxes.
that simply can not happen. not to mention that putting a price on something that is not yet sold is not possible.

what will happen (or rather continue to happen) is that whenever that property is converted to fiat and the profit is calculated, then you'll have to pay the tax on that sale.

Someone explained that this was an old proposal which never actually made it to even a bill. This sounds pretty much a mad plan. People would stop buying real estate, stocks and would basically stop owning ANYTHING, lest they need to pay taxes.
This would still align with another radical vision about a future when everything will be rented and nothing will be owned by the people. They are all pretty happy working and earning paychecks while everything has become a "service". I doubt any government can ever implement something like this without having a total revolution of sorts.

This is kind of a silly idea. The rich are not going to stop buying assets because they have to pay tax on appreciation. Asset appreciation is how they build wealth, you don't just stop building wealth because it's taxed. What will happen is that taxing unrealized gains will cause assets to need to be liquidated to raise cash to pay the tax, and that overall will drive asset prices down.  However, considering asset prices are largely inflated because the economy borrows money from the future to finance the US government debt (i.e., tax rates are lower than they should be so as not to slow down economic growth), this would only be a step towards reverting towards the true value of the current economy.

[JoKleinTopper]

I really hope this will not gonna happen since it's very like to force those with bitcoins sell them, which will help the monopoly of bitcoins by the government. If it does happen, we bitcoin holders must stand together to resist it!