Bitcoin tax makes no sense

[PrivacyG]

I really subscribed to your points here . Bitcoin is indeed an asset , and not generally accepted as as money. It is wrong to tax an asset. If your asset is sold tax can apply, and not taxing Bitcoin holders. Bitcoin is there for everyone who wishes to invest in it, if you are interested, go ahead and do that and not by enforcing a tax law that will affect Bitcoin investors.
There are some countries who initiated this Bitcoin tax law as medium to attack people into bitcoin investing. Some are forced to embrace bitcoin because of the enormous number of people investing in bitcoin, they look at it that placing a ban on Bitcoin investing is not the best, instead let them begin to tax bitcoin holders, and regardless of weather you are on profit or not.

Then be angry about all the other Assets being taxed too.  Tell me one asset you can make profit you would not have to pay tax for.  Bitcoin is only different to us who are using it.  If regulators made Bitcoin tax free, it would kind of become the 'off shore' of that country.  Assets you sell and made profit on are taxed, people only do not care about reporting that to the tax authority.

Of course banning the only Asset that offers an actual legitimate alternative to Fiat could turn very wrong for the politicians planning to destroy it.  It looks like a direct attack.  A much easier way to ruin it is to make it very difficult for Bitcoin owners to hold Bitcoin without constantly having the dynamite of IRS possibly asking for more proof you do not have.  Not to mention that if all the records have to be sent to tax authorities, it kind of defeats the purpose of having financial freedom.

[BlackHatCoiner]

I get the reason taxes exist.

I used to believe the same thing. That taxes are a necessary evil that are supposed to go for the common good. I no longer believe it. If it were for the common good, I think that there would form some market mechanism that would make sense for the people to voluntarily pay for roads, healthcare and schools. Before humanity migrated into these big States that we now have, people used to live in communities where cooperation wasn't coerced but driven by mutual aid.

When you remove the monopoly of the State, you don't remove the human desire for order and infrastructure. You simply change the incentive structure. Instead of a system where funds are extracted under the threat of force and allocated by disconnected politicians, a voluntary system relies on competition and direct accountability.

The reason we pay taxes is simply that there are conquerors in every country who remain in power. They do not allow peaceful cooperation to ever take place, because they are highly incentivized to continue extracting as much as possible. Meanwhile, they psyop you to convince you that their presence is not only necessary but highly beneficial to your life.

[LFC_Bitcoin]

It doesn’t matter what my opinion is, governments are greedy, corrupt and selfish. They will do anything to justify taxation and lavish spending on stuff most of us don’t benefit from. If it was up to me, there would be no tax on Bitcoin in the UK but they can’t help themselves but to stand there with their hands out to take their share from my success.

[Youngrebel]

It doesn’t matter what my opinion is, governments are greedy, corrupt and selfish. They will do anything to justify taxation and lavish spending on stuff most of us don’t benefit from. If it was up to me, there would be no tax on Bitcoin in the UK but they can’t help themselves but to stand there with their hands out to take their share from my success.

I actually get the frustration behind that, but saying all governments are just greedy misses some important nuance. Taxation at least in principle is not just about taking from people but how public systems stay running. Things like infrastructure, healthcare, education, and security do not fund themselves. The real issue is whether that money is used responsibly, and that’s where a lot of people feel let down. On Bitcoin specifically, governments like the UK’s are not just trying to grab a share for the sake of it. They see crypto as an asset class, similar to stocks or property, so they apply capital gains tax rules.

[m2017]

This is according to Cata Institute. You can read the reason Cata Institute said about the reasons bitcoin tax makes no sense:

Every bitcoiner agrees with their opinion.

In fact, a tax on bitcoin only makes sense for the regulator (easy money).

Second, the complexity of administering the tax creates an additional burden on users of alternative currencies, including Bitcoin and other cryptocurrencies. Where a sales tax is usually a flat percentage added on to the bill, capital gains taxes require you to tell the Internal Revenue Service the date you got the Bitcoin, the date you paid for something with it, what you originally paid for the Bitcoin, and the gain or loss for each transaction. All of these details must be recorded on Form 8949 and compiled on Schedule D of Form 1040 to calculate the tax owed for each purchase of goods and services.

It's precisely this regulator's greed that will discourage those willing to pay taxes. This procedure should be simple: pay a fixed percentage and get rid of the regulator. This way, the regulator would receive a portion of the taxes, but ultimately, it will receive less (chasing ALL the taxes owed by investors in cryptocurrencies).

Third, with a process this complicated, there’s always the looming threat of an audit and penalty should you make a mistake (innocent or not). That threat alone can deter anyone interested in trying something new.

If the regulator did not operate using a "baton" system, but instead stimulated and encouraged taxpayers, for example, by reducing taxes upon fulfilling certain conditions (such as timely payment of taxes), then instead of deterring, this would encourage voluntary taxation.

These are my own reasons:
If fiat can be in bank and no tax for spending it, I also think taxing crypto is making any sense.

Some countries impose taxes on bank deposits exceeding a certain amount.

If cryptocurrencies were considered money rather than an investment instrument, taxing them as a bank deposit wouldn't make sense. In the current environment, regulators view cryptocurrencies as an investment vehicle, like securities or stocks.

One solution would be to make profits from cryptocurrencies tax-exempt up to a certain amount.

Another thing is that if someone is losing money from crypto, why do the government not pay the person the tax gained from people that make money from crypto?

I've asked this question before.

How will the government spend the money collected from investors' taxes in cryptocurrencies? Investors who suffer losses are also citizens of your country, and therefore require state (financial) protection. It would be reasonable to use part of the tax pool to compensate those who suffered from unsuccessful investments.

If you allow yourself to take money, then you have a DIRECT RESPONSIBILITY to care for those in need. Either collect taxes and provide financial protection for unsuccessful investors, or keep your hands off other people's money, which you have absolutely no involvement in, as you don't share any risks. Who needs a one-sided game?

Because the regulator exists to take money, not to give it away.

I always think that they governments are only looking for all possible means to earn money from citizens through taxes.

For the government, citizens are just batteries that generate energy (money) to satisfy their personal goals and ambitions.

[Abiky]

This is according to Cata Institute. You can read the reason Cata Institute said about the reasons bitcoin tax makes no sense:

First, capital gains tax rates are structured to incentivize long-term holding. This policy distorts the market by incentivizing buying and selling solely to mitigate tax losses. However, it’s especially distortionary in the context of money, given that long-term holding policies discourage what is generally considered “currency use.”

Second, the complexity of administering the tax creates an additional burden on users of alternative currencies, including Bitcoin and other cryptocurrencies. Where a sales tax is usually a flat percentage added on to the bill, capital gains taxes require you to tell the Internal Revenue Service the date you got the Bitcoin, the date you paid for something with it, what you originally paid for the Bitcoin, and the gain or loss for each transaction. All of these details must be recorded on Form 8949 and compiled on Schedule D of Form 1040 to calculate the tax owed for each purchase of goods and services.

Third, with a process this complicated, there’s always the looming threat of an audit and penalty should you make a mistake (innocent or not). That threat alone can deter anyone interested in trying something new.

These are my own reasons:
If fiat can be in bank and no tax for spending it, I also think taxing crypto is making any sense. Another thing is that if someone is losing money from crypto, why do the government not pay the person the tax gained from people that make money from crypto? I always think that they governments are only looking for all possible means to earn money from citizens through taxes.

What is your opinion about this?

It's totally unfair. Treating Bitcoin as an asset/commodity, instead of a currency. This means you will get taxed for each crypto transaction you make on the Blockchain. Imagine if you use crypto for daily payments. You will be taxed to the bone. It's even worse in countries with high crypto taxes (like India, for instance).

I think Bitcoin should be treated the same way as Fiat. Unfortunately, people consider Bitcoin to be a store of value. Just like Gold. We can't expect governments to change their stance, if the majority treats BTC as "Digital Gold". If taxes within your country are quite bothersome, you can always move to another country with more flexibility. Better be safe than sorry, right?

[TokenTikas]

I always think that they governments are only looking for all possible means to earn money from citizens through taxes.

Generally bitcoin was created as a way to avoid this kind of tax system, allowing people to make transactions freely without much restriction. But whenever the issue of taxation comes up, it feels like there is an attempt to turn bitcoin into something controlled, by bringing it under local currency systems and imposing taxes, which goes against its idea of freedom. Even though it may not fully take away that freedom, it often looks like the main reason governments place taxes on bitcoin is simply to generate revenue from it.

[davis196]

If fiat can be in bank and no tax for spending it, I also think taxing crypto is making any sense. Another thing is that if someone is losing money from crypto, why do the government not pay the person the tax gained from people that make money from crypto? I always think that they governments are only looking for all possible means to earn money from citizens through taxes.

What is your opinion about this?

There's a tax for spending fiat money. It's called sales tax in the USA and Value Added Tax(VAT) in Europe.
I live in country, where there's no capital gains tax, so I'm pretty much fine and the topic doesn't concern me. I do agree that the capital gains tax in the USA distorts the financial markets by incentivizing the asset owners to hold their assets as much as possible.
The government paying you to cover your losses by using the tax revenue gathered from people, who paid taxes over their profits? This sounds like socialism to me. This would distort the financial markets as well, because the people would be incentivized to take higher risks, because the government would partially cover their losses.

[FanEagle]

In a world where it's a random tax, yes it makes no sense. But just like stocks, if you hold them, it should not be taxed only if you sell with a profit, you should be taxed, and if you sell for a loss, that should cut down on your yearly tax payment too.

So let's assume you make 100k a year, and 50k of that goes to tax, and then you start trading with 10k, and if you make it to 20k, then 10k of that is profit and should be taxed, if you lose it all, then your 10k should be dropped from other tax, and you should pay 40k from your salary. That's how it is for most people in most nations and something like that would work. After all, every income is taxed, so why not bitcoin income, but only should be taxed when realized, not when it goes up while you are still holding.

[legiteum]

Bitcoin should not be treated any differently than any other investment. Saying Bitcoin should be tax-free is like saying AAPL or NVDA should be tax free.

If you don't want any taxes, vote for having no taxes on anything. In the US, people have been trying to get rid of the capital gains tax for decades, and that would get rid of taxes for all investments, not just Bitcoin.

But if you go to Washington or any other national capital and say, "my specific favorite investment should not be taxed" they will laugh at you.

[Mate2237]

It may look unfair but the reality is that crypto currency is now a big deal today, so government just has to step in to make money from the process. It's my believe that one of the reasons why government allowed the use of crypto currency in the first place was the tax that they will be making. Because when crypto started making waves and was becoming more popular not many government were in support of it until crypto laws were passed which made crypto currency a security asset paving the way for tax.


Another reason why government will not allow crypto to operates without collecting tax from it is that government will not want anything that will not generate profit to them freely so whether you see it as fair or not government will collect tax from crypto currency.

[Lida93]

Snip

Yes, that’s right. The greed of the government as the ruling authority with the highest power to govern the nation has led them to abuse the power they hold. And they are supposed to be public servants paid by the citizens to carry out the collective will. But instead they seem oblivious to their position which should align with the voices of the people. They appear to disregard the values of democratic principles that should be upheld to avoid giving the impression of a tyrannical state. On the other hand the government should listen to the majority voice of the citizens regarding every policy they intend to implement. And they should understand how to implement a reasonable Bitcoin tax. It is the government’s duty to treat its citizens fairly as they are paid to handle matters related to policies that do not benefit just one side.

I get the frustration, many governments dont really understand bitcoin yet or they just see it as something to tax and control. But I think its not only greed, sometimes its also lack of knowledge and fear of losing control over monetary system. Bitcoin doesnt fit well into old structures, so they react with strict rules. About taxes, yeah it should be fair and clear, not confusing or punishing users. If rules are too harsh, people just move elsewhere or go more private, thats also good for anyone.

At the end, bitcoin doesnt really depend on government approval anyway. It runs regardless, and people who understand it will keep using it. So yeah, governments can slow things maybe, but they cant stop it completely.

Talk about old structures not aligning with the bitcoin system and I would agree with you but definitely not about the government not having an understanding of what bitcoin is. Of course they do understand it vividly and knows that it undermines their control, their censorship of being in charge as it is for them with the conventional fiat system.  The community of bitcoin network are the ones in charge and can't be the government because bitcoin isn't a centralized digital currency.

[tbct_mt2]

Talk about old structures not aligning with the bitcoin system and I would agree with you but definitely not about the government not having an understanding of what bitcoin is. Of course they do understand it vividly and knows that it undermines their control, their censorship of being in charge as it is for them with the conventional fiat system.  The community of bitcoin network are the ones in charge and can't be the government because bitcoin isn't a centralized digital currency.

They are smart enough to understand what Bitcoin is as if many citizens understand Bitcoin, there should be many people in governments understand Bitcoin too.

Many years ago, after Satoshi Nakamoto announced to leave Bitcoin community, CIA invited Gavin Andresen to its headquarter for a speech about Bitcoin.
Gavin will visit the CIA.

I want to get this out in the open because it is the kind of thing that will generate conspiracy theories:  I'm going to give a presentation about Bitcoin at CIA headquarters in June at an emerging technologies conference for the US intelligence community.

So if governments want, they can learn about Bitcoin by themselves or invite Bitcoin tech guys to teach them about Bitcoin, and now there are many AIs can do that job well.

[Luzin]

Once again.  I hate taxes.  But some times, they do make sense.

Logically it's stupid if we think superficially that the country doesn't find me a job, but then why does it take money from me? LOL. I actually also hate taxes, because most of my country collects taxes but the facilities and comfort for citizens have not improved much. More taxes are taken and embezzled. This is reality and it happens even today, to the point that taxes make a small number of people rich because of tax money corruption. Regarding crypto taxes, I actually don't mind because my country is still quite reasonable in determining the amount of tax. There is even a voluntary tax reporting system. I remember, the more they try to take taxes, it becomes a sign that the country is not in a good financial condition.

[dezoel]

On a "bitcoin"talk forum, if you ask people if their income should be taxed, they will say no. In fact, in anywhere of the world, go literally anywhere, and ask people if they should pay less taxes, they will say yes.

I am not a socialist either and I am not expecting people to end up with zero taxes neither, so there must be something in between. Consider bitcoin like stocks, and if someone makes money from stocks, and however that is taxed, it should be getting taxed the same here as well.

[legiteum]

[...]
I think Bitcoin should be treated the same way as Fiat.

If that was the case it would be subject to sales tax--just like fiat. That would be, "taxing every transaction". That would be a nightmare.

Instead it's treated like any other investment (including the USD you hold in your interest-paying bank account), which means you pay capital gains.

Regardless, you aren't going to convince anybody that your favorite investment shouldn't be taxed when everything else is taxed. Advocate lower taxes for everybody and maybe you'll get somewhere, but just screaming that you want a special favor probably isn't going to get too far.

[Rabata]

These are my own reasons:
If fiat can be in bank and no tax for spending it, I also think taxing crypto is making any sense. Another thing is that if someone is losing money from crypto, why do the government not pay the person the tax gained from people that make money from crypto? I always think that they governments are only looking for all possible means to earn money from citizens through taxes.

What is your opinion about this?

In my opinion, taxes definitely play an important role in the overall development of a country, but governments need to understand which areas should be taxed and which should be left out. Bitcoin's journey has just begun. Its adoption is increasing rapidly worldwide. If it is not given a chance and the tax burden is imposed at the beginning, then its speed will be somewhat slow. If governments want, they can withdraw taxes from Bitcoin, but for this they need good will. If they demand, then as citizens they will have to pay that tax, but if importance is given to Bitcoin adoption at the beginning, then governments can get more taxes later.

[Die_empty]

In my opinion, taxes definitely play an important role in the overall development of a country, but governments need to understand which areas should be taxed and which should be left out. Bitcoin's journey has just begun. Its adoption is increasing rapidly worldwide. If it is not given a chance and the tax burden is imposed at the beginning, then its speed will be somewhat slow. If governments want, they can withdraw taxes from Bitcoin, but for this they need good will. If they demand, then as citizens they will have to pay that tax, but if importance is given to Bitcoin adoption at the beginning, then governments can get more taxes later.

The OP is talking about capital gains and the complexity of filing your Bitcoin transactions to the tax office. How would the tax office expect Bitcoin owners to present such complicated details and also pay due tax? Tax is necessary for the survival of any country but I think it should be fair. Bitcoin should subtract the losses incurred in the course of hodling and selling the coin. Some countries are intentionally targeting crypto owners because they assume that we make a high profit.

[beerlover]

It does make sense if you are the government, considering almost every single government in the world (as far as I know all of them but maybe I do not know some smaller ones) corrupt, that means our tax is never enough for them.

They have to work and show something, otherwise they would not get elected again, but they would rather use their money to slander the other side, so that way we would hate the other side and vote for the government again, and instead of actually making the nation better, their idea is to make sure they are bad but other side is even worse. This means they need out taxes to fill their coffers and they will keep doing that and no matter how much more tax we pay, they will want even more.

[hero_the_bossman]

It does make sense if you are the government, considering almost every single government in the world (as far as I know all of them but maybe I do not know some smaller ones) corrupt, that means our tax is never enough for them.

They have to work and show something, otherwise they would not get elected again, but they would rather use their money to slander the other side, so that way we would hate the other side and vote for the government again, and instead of actually making the nation better, their idea is to make sure they are bad but other side is even worse. This means they need out taxes to fill their coffers and they will keep doing that and no matter how much more tax we pay, they will want even more.

Or they just want BTC to not to be a better alternative, but just like the rest of them All is taxed by the gov, so why BTC should be different? - is probably what's in their heads.