True you always had to pay taxes on profits made with bitcoin( work, sales, service, etc) , but this ruling is different it is taxing bitcoin itself.
It is not.
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It is, since you do not pay taxes on the currency itself, only on income generated and that is independent of the currency.
Also the set of rules is different for the US dollar than bitcoin, if bitcoin is to be a competing currency it needs and equal playing field.
And as far as mining went you did not pay any taxes since officially bitcoin was not money, currency or property, if you think it was under the law please provide such link,
Here you go. As far as regular income is concerned, the IRS doesn't actually care whether you receive money, currency, or property, you have to pay tax on the fair market value of the income you received for your services (and you'll have a hard time convincing anyone that mining isn't a service).
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True you pay taxes on the income that you receive, but in this case the currency itself is taxed.
Let say you receive income in dollars and pay income tax on those dollars, now those dollars have been taxed and are tax free, they are not taxed again lets say to decide to save them for later use, only activity done with the dollar like purchase something and then pay sales tax.
Lets say now you receive income bit bitcoin and pay your income tax, now we have tax free bitcoin since they have paid the tax, but here comes the problem even though bitcoins paid their tax those same bitcoins will be taxed over and over simply by existing. so the bitcoins get taxes but the dollars do not get taxed, that is not acceptable.
You do not pay taxes on the creation of new currency, since the creation of a currency does not represent the creation of more wealth.
Does the FED pay taxes on newly printed US dollars, they do not, printing money is not generating wealth.
If you hold $1000 dollars on a safe at home you do not pay taxes.
if you hold the equivalent in bitcoins in the same safe you are expected to pay taxes.
That is fraud, since the rules that are being applied to the dollar are not the same rules being applied to bitcoin.
Yes, inflation is fraud. What's your point? You pay far less in CGT than you would have lost if you held dollars, so keeping all your wealth in dollars to avoid tax isn't really a smart idea.
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Good we agree inflation is fraud. My point is that we have the right to avoid inflation. Bitcoin does exactly that, but the current IRS ruling expects you to pay inflation tax with bitcoins.
In regards to mining, we can compare that to the FED in the case of dollars, does not FED pay taxes on the creation of new dollars, most likely not. If the FED does not pay taxes on the creation of news dollars, why should bitcoiners pay taxes on the creation of new bitcoins.?
How is that in any way a valid comparison?
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The are both competing currencies, Bitcoin VS US dollar, and the laws should be the same to have an equal playing field, if the playing filed is not the same, a bad currency may win over a good one.
The ruling is retroactive, there is not ruling anywhere where the bitcoin currency itself is taxed, and it is not obvious that bitcoin as a currency could be taxed since dollars are not taxed.
Depends on which dollars you're talking about. If your talking about Canadian dollars, or Australian dollars, or any other foreign dollar, than it
is obvious that any gains from trading those currencies as well as any income received in those currencies is indeed taxed, so why would Bitcoin be any different?
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I was referring to the US dollar, since it is a US ruling, you do not pay taxes on holding dollars if they appreciate or debase on value, why should it be different for a competing currency.
I have been in the town of San Ysidro, CA, USA where Mexican pesos have high acceptance rate, and are exchanged for the dollar on many exchanges, I would like to point out that such exchanges are anonymous, and you do not a property tax or any tax on the exchange, you do pay a commission to the exchange, and the exchange have to pay taxes based on their profit, but the Mexican peso itself is not taxed, why should bitcoin be taxed.
You are sorely mistaken. Gains from such trades are taxable, and you may face penalties for not reporting such exchanges.
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The problem is those are not gains, since it is one currency loosing value against another currency, and what if the bad currency that is being debased the most makes the other look good when in fact both are loosing purchasing power.
For example not long ago the Mexican peso gained value vs the dollar, but vs fuel they both lost value, according to you thats a gain, I would consider that a loss.
In San Ysidro you can go to any exchange and be completely anonymous, so it is clearly there is no intent on the government for you to report such exchanges.
Bitcoin also can not be considered a foreign currency since it is mined everywhere.
Which may be why they consider it property instead of currency. That only affects capital gains though, not regular income tax.
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The dollar is not subject to such laws, why should bitcoin be subject to laws which the dollar is not.
After all bitcoin is a competing currency.
Not only that but the IRS ruling contradicts the FINCEN ruling, that basically said as long as bitcoin does not touch the dollar you are ok, in direct contradiction to the IRS ruling.
FinCEN never said anything about taxation.
True, but it never considered bitcoin to be property, and very much said all reporting activity was done only when bitcoin touches the dollar in direct contradiction of the IRS.
