Economic Impact of Legalized Cryptocurrency with High Taxation

[fawad_khan1]

What could be the potential benefits and drawbacks of legalizing cryptocurrency in a country with a high tax rate of 30-40% on crypto transactions?

[NotFuzzyWarm]

Benefit is that it establishes a legal basis for allowing crypto usage.

Drawbacks depends on when that tax is applied and whether or not it has a capital gains structure like the US has. If it is applied to ALL transaction as a type of sales tax at the 30-40% that would be a terrible idea. In the US tax is applied taking into consideration of what the crypto value was when someone 1st gets it and what it is worth when used. As for the % itself, 30-40% is too high. It the US it ranges from 20-30% and is largely based on the change in value.

[TheUltraElite]

What could be the potential benefits and drawbacks of legalizing cryptocurrency in a country with a high tax rate of 30-40% on crypto transactions?

Benefit is definitely a new population group entering into regular crypto use without the fear of legal prosecution.

But that high taxation is a burden that may deter they from transacting crypto.

Here in India, we have 30% on gains and a 1% TDS on buying crypto. This has deterred the people from using crypto regularly and people are trying to find illegal ways to spend them.

[pakhitheboss]

What could be the potential benefits and drawbacks of legalizing cryptocurrency in a country with a high tax rate of 30-40% on crypto transactions?

The only benefit that comes to my mind is reduction of tax evasion. But, why will that country legalize cryptocurrency? They are already taking a big chunk of an individuals earning in the form of tax. The government is getting what it wants without legalizing crypto. They can put in a few stringent laws in place and tax evasion can be taken care.

[avikz]

What could be the potential benefits and drawbacks of legalizing cryptocurrency in a country with a high tax rate of 30-40% on crypto transactions?

With this tax rate - I see zero benefits!

Having a legal framework around cryptos, is a good thing because it usually helps in increased adoption. But with 30-40% tax rate, a common person won't get any benefits out of it and even the most honest person will look for ways to evade tax.

The same thing is happening in my country as well. The government had imposed a 30% tax on Bitcoin without the opportunity to offset the losses. Since that day, I have not sold my bitcoins because I am not happy about paying 30% tax on it! But in case an emergency happens where I need to sell off my holdings, I will have to set aside 30% of it just to pay the taxes.

Such kind of high tax rate doesn't benefit anyone except the government.

[zasad@]

What could be the potential benefits and drawbacks of legalizing cryptocurrency in a country with a high tax rate of 30-40% on crypto transactions?

This is the wrong question. You need to know what country you are talking about and study the cryptocurrency tax legislation in full. And the tax rate you are talking about is inadequate. Why expose yourself to risk if there are more profitable countries or offshore zones for trading cryptocurrencies.

[Poker Player]

In general high taxes, not only in crypto, tend to stifle business and discourage innovation. All this in the name of a supposedly fairer redistribution of wealth, the so-called social justice, which in certain cases may work but what it ends up doing is that politicians manage large amounts of money that would be much better handled by free interactions of the private sector and that in many cases are spent with political interest, not in the interest of the general population.

[zasad@]

In general high taxes, not only in crypto, tend to stifle business and discourage innovation. All this in the name of a supposedly fairer redistribution of wealth, the so-called social justice, which in certain cases may work but what it ends up doing is that politicians manage large amounts of money that would be much better handled by free interactions of the private sector and that in many cases are spent with political interest, not in the interest of the general population.

In many European countries, personal income tax and capital gains tax are very high, ranging from 15-45%, and if a resident's income is above 100,000 euros, he will pay at least 30%.
If you look at corporate income taxes, the average range is 15-30%, but companies know how to understate profits.

For example, in Russia, if an employee's salary is $1,000, the organization is required as a tax agent to withhold 13% of taxes and send $130 to the tax office. I heard that in some countries, employees file tax returns and pay taxes themselves, which further increases their expenses.
But in addition to the fact that the employee will receive $870 in hand, the organization must also pay approximately another 30% or $300 from its budget to various social insurance funds and the pension fund.
Therefore, we have a lot of salaries in envelopes, when an employee officially receives $300 in salary, and another $700 in cash without taxes.
___
I wrote this because there are many other taxes besides income taxes or capital gains taxes that need to be taken into account. It may be that 30% is a good tax rate if other taxes are minimal, so in each matter you need a good tax specialist who will offer optimal solutions or suggest other jurisdictions.

[Poker Player]

For example, in Russia, if an employee's salary is $1,000, the organization is required as a tax agent to withhold 13% of taxes and send $130 to the tax office. I heard that in some countries, employees file tax returns and pay taxes themselves, which further increases their expenses.
But in addition to the fact that the employee will receive $870 in hand, the organization must also pay approximately another 30% or $300 from its budget to various social insurance funds and the pension fund.
Therefore, we have a lot of salaries in envelopes, when an employee officially receives $300 in salary, and another $700 in cash without taxes.

This is similar in most countries, at least the developed ones. One thing is taxes, such as income tax, of which a percentage is usually withheld from payroll, and the rest you mention are labor costs, such as social security payments.

But I think the OP is referring to capital gains taxes on crypto trading, so none of these taxes as labor costs would apply here.

[fawad_khan1]

As you know, countries like India, the UK, France, and Israel have very high cryptocurrency taxes, sometimes up to 50%. For example, India has a 30% tax, and some people are avoiding withdrawals because of it. Here, the government plans to impose a 45% tax on crypto, which concerns me.

If we're paying these rates, we should expect some protection or help, especially given the frequent scams in the crypto world.

[TheUltraElite]

If we're paying these rates, we should expect some protection or help, especially given the frequent scams in the crypto world.

We have take the decision to invest in these sectors, government does not like it but cannot outright ban it, so they tax it instead and keep the percentage so high that people find it unpalatable.

If you think government will protect your assets, your fundamental understand of cryptocurrencies is flawed. There is no central "god"-like figure here controlling everything, rather you have to protect your own assets.

The SEC in US cant do anything about crypto scams, what else do you think you can expect?

[zasad@]

As you know, countries like India, the UK, France, and Israel have very high cryptocurrency taxes, sometimes up to 50%. For example, India has a 30% tax, and some people are avoiding withdrawals because of it. Here, the government plans to impose a 45% tax on crypto, which concerns me.

If we're paying these rates, we should expect some protection or help, especially given the frequent scams in the crypto world.

I have nothing against taxes, but a person shouldn't feel like an idiot after paying them.

Here are Russian services for exchanging bitcoin for cash in India
https://www.bestchange.ru/bitcoin-to-dollar-cash-in-dlh.html
https://www.bestchange.ru/tether-trc20-to-dollar-cash-in-dlh.html
https://www.bestchange.ru/ethereum-to-dollar-cash-in-dlh.html

https://www.bestchange.ru/bitcoin-to-dollar-cash-in-clctt.html
https://www.bestchange.ru/bitcoin-to-dollar-cash-in-mmb.html

These services work like this: you send bitcoins and the courier brings you cash. Even if the police catch you, the courier will say that he knows nothing.
I do not advertising these services, you should do your research and talk to representatives before exchanging.

I communicate in groups of Russian expats from different countries, and in each even small group of 200-300 active users there are 1-2 private money changers who will exchange your cryptocurrency for cash. The rate will be 3-5% lower than the market rate, but it is better than paying 30-50% in taxes.

For example, in Russia, if an employee's salary is $1,000, the organization is required as a tax agent to withhold 13% of taxes and send $130 to the tax office. I heard that in some countries, employees file tax returns and pay taxes themselves, which further increases their expenses.
But in addition to the fact that the employee will receive $870 in hand, the organization must also pay approximately another 30% or $300 from its budget to various social insurance funds and the pension fund.
Therefore, we have a lot of salaries in envelopes, when an employee officially receives $300 in salary, and another $700 in cash without taxes.

This is similar in most countries, at least the developed ones. One thing is taxes, such as income tax, of which a percentage is usually withheld from payroll, and the rest you mention are labor costs, such as social security payments.

But I think the OP is referring to capital gains taxes on crypto trading, so none of these taxes as labor costs would apply here.

After the author's 2nd post, I already understood what he was asking about. I communicate with different people from European countries, where taxes are high, I communicate with people who do business in Turkey, where taxes are also high, but there are ways to reduce taxes everywhere. Otherwise, a business with a 45% income tax or capital gains tax loses its meaning.

[YOSHIE]

What could be the potential benefits and drawbacks of legalizing cryptocurrency in a country with a high tax rate of 30-40% on crypto transactions?

If the tax system is implemented by the state, it is clear that the state has the advantage, crypto users are clearly at a disadvantage, the tax is 30-40, my understanding is that legally it is the craziest tax I have ever seen, the percentage figure of 30-40 is a crazy number in the system taxation.

For me, it would be better for the government not to legalize crypto transactions, let it happen as it is now, not prohibit it and not order it, I think it's good like that, Just imagine if you make a withdrawal, if you have $100 in Bitcoin, you only receive $60 in funds, this is colonialism, it is an oppressive law and a conflict.

[Easteregg69]

A stock owner told me he don't trade his crypto. He save it's for spending.

The bird only wanna play with me because I am the best. And guess what. I bought a hardware wallet.

It's the FIFO deal. It takes the fun out of it.

What could be the potential benefits and drawbacks of legalizing cryptocurrency in a country with a high tax rate of 30-40% on crypto transactions?

If the tax system is implemented by the state, it is clear that the state has the advantage, crypto users are clearly at a disadvantage, the tax is 30-40, my understanding is that legally it is the craziest tax I have ever seen, the percentage figure of 30-40 is a crazy number in the system taxation.

For me, it would be better for the government not to legalize crypto transactions, let it happen as it is now, not prohibit it and not order it, I think it's good like that, Just imagine if you make a withdrawal, if you have $100 in Bitcoin, you only receive $60 in funds, this is colonialism, it is an oppressive law and a conflict.

People switch to etn and etf to ease the speculation. It's more strict in the set up. You work with positions and not coins. Easier to administrate. From a tax perspective.

[OcTradism]

In general high taxes, not only in crypto, tend to stifle business and discourage innovation. All this in the name of a supposedly fairer redistribution of wealth, the so-called social justice, which in certain cases may work but what it ends up doing is that politicians manage large amounts of money that would be much better handled by free interactions of the private sector and that in many cases are spent with political interest, not in the interest of the general population.

It can help societies and the poor to have more comfortable lives in worst times but it has disadvantage. It can be abused by lazy people who don't want to work and get money by themselves. Those people can try to stay away from the labor force and maximize time they can rest, free from work, get money from social wealth-fare incentives and benefits from government.

I wrote this because there are many other taxes besides income taxes or capital gains taxes that need to be taken into account. It may be that 30% is a good tax rate if other taxes are minimal, so in each matter you need a good tax specialist who will offer optimal solutions or suggest other jurisdictions.

If my signature campaign in the forum is a piece of my income, should I include it in my tax report?

Is it only considered as part of my income and contributes to my total income that will affect final result of the tax report and whether I have to pay tax, and if yes, how much.

If I only hold my signature campaign payment, I will not have to pay capital gain tax?

My thinking is paying tax for income first and in future if I sell it, have capital gain, I will have to pay capital gain tax.

[Fiatless]

What could be the potential benefits and drawbacks of legalizing cryptocurrency in a country with a high tax rate of 30-40% on crypto transactions?

A few months ago the country in which I reside banned all Exchanges from engaging in P2P transactions with our local currency. It was a big problem because many traders began to seek means of invading this restriction. Some of them had to spend so much to travel to other neighboring countries to carry out transactions. Just this month the restrictions were lifted and replaced with a 30% tax. There was protest from the crypto community but many of us accepted it in good faith since it is far better than a ban.

The advantage of this tax is that we are now free to engage in all forms of crypto transactions but it will cost us some money. Hopefully, the tax will be used to carry out developmental projects and not be looted by government officials. Having a policy on cryptocurrency will attract more inventors since a high tax is better than a ban. 

[zasad@]

I wrote this because there are many other taxes besides income taxes or capital gains taxes that need to be taken into account. It may be that 30% is a good tax rate if other taxes are minimal, so in each matter you need a good tax specialist who will offer optimal solutions or suggest other jurisdictions.

If my signature campaign in the forum is a piece of my income, should I include it in my tax report?

Is it only considered as part of my income and contributes to my total income that will affect final result of the tax report and whether I have to pay tax, and if yes, how much.

If I only hold my signature campaign payment, I will not have to pay capital gain tax?

My thinking is paying tax for income first and in future if I sell it, have capital gain, I will have to pay capital gain tax.

I don't know your country and its laws. In my country I have to pay tax after selling cryptocurrency, and cryptocurrency is not taxed.
I am sure that if you sell this cryptocurrency, you will be obliged to pay income tax, and in other cases it is better to consult with tax consultants or your colleagues from your country.

[pakhitheboss]

I don't know your country and its laws. In my country I have to pay tax after selling cryptocurrency, and cryptocurrency is not taxed.
I am sure that if you sell this cryptocurrency, you will be obliged to pay income tax, and in other cases it is better to consult with tax consultants or your colleagues from your country.

Your country Russia is now on my list where someone dealing in Bitcoin and altcoins can shift. Other things need to be considered, such as inflation and the way of life and the most important thing is the cold and the current war going on. If those problems can be ignored your country might become the ideal destination for anyone dealing in cryptocurrencies.

I always wanted to visit the country that was once called the USSR but could not due to financial issues of mine. Since those issues have been solved due to Bitcoin it will be great to come to your country and stay there for some time to get adapted to the weather and enjoy zero tax on Bitcoin transactions or altcoins.

[zasad@]

I don't know your country and its laws. In my country I have to pay tax after selling cryptocurrency, and cryptocurrency is not taxed.
I am sure that if you sell this cryptocurrency, you will be obliged to pay income tax, and in other cases it is better to consult with tax consultants or your colleagues from your country.

Your country Russia is now on my list where someone dealing in Bitcoin and altcoins can shift. Other things need to be considered, such as inflation and the way of life and the most important thing is the cold and the current war going on. If those problems can be ignored your country might become the ideal destination for anyone dealing in cryptocurrencies.

I always wanted to visit the country that was once called the USSR but could not due to financial issues of mine. Since those issues have been solved due to Bitcoin it will be great to come to your country and stay there for some time to get adapted to the weather and enjoy zero tax on Bitcoin transactions or altcoins.

If your income is in dollars, you won't notice inflation in Russia. Russia has inexpensive food, very high quality paid medicine, and if you go to a good clinic, you will see the latest models of the best European medical equipment.

Don't get your hopes up that Russia has zero taxes.
There are taxes in Russia, but as long as there are exchangers who change cryptocurrencies into cash, no one pays taxes for the most part.
If you are in Russia, you will have to take some security measures if you want to exchange large amounts of cryptocurrencies for fiat.
And if you have an exchange amount of several thousand dollars a month, on an average programmer's salary of 3-8 thousand dollars, then you will not be of strong interest to law enforcers and scammers.

[Argoo]

What could be the potential benefits and drawbacks of legalizing cryptocurrency in a country with a high tax rate of 30-40% on crypto transactions?

The only benefit that comes to my mind is reduction of tax evasion. But, why will that country legalize cryptocurrency? They are already taking a big chunk of an individuals earning in the form of tax. The government is getting what it wants without legalizing crypto. They can put in a few stringent laws in place and tax evasion can be taken care.

The government has the ability to strangle with high taxes anything it does not want to develop or even exist. The stated tax rate of 30-40 percent is really high and does not promote the mass use of cryptocurrency. However, since the movement of cryptocurrency is very difficult to trace back to its owner, people, on the one hand, will be forced to look for and will find ways to bypass paying this high tax. But on the other hand, with such a high tax rate, the use of cryptocurrency will not be widespread.
The positive in this situation is that official status is always better than illegal or semi-legal.