Bitcoin tax makes no sense

[Wiwo]

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.

The reason is clear even fiat are actually taxed base on the interest or profit gained on that capital and not the capital itself that is taxed. This usually called withhold capital tax and it is the reason why money on current accounts are not taxed because there is no interest that build on it. Same thing applies to bitcoin, according to government only the profit will be taxed, because it’s actually viewed as an asset.

But one surprising thing about how double faced the government are is that, this same government usually bring crypto and bitcoin into consideration when there is issue of tax and things like that, in my country the government hasn’t made any clear stands on bitcoin but actually got under taxable assets. More so why is bitcoin viewed under taxable assets when it was the government that say its was a Ponzi scheme.

Nigeria government I'm particular have no regulatory framework for bitcoin, and the capture of bitcoin as capital assets to me lack the basic tools to become reality even if in the future the Nig government decides to create regulation around bitcoin/cryptocurrency, capital gained tax can work on other assets listed alongside bitcoin but going to be a war to collect such gained tax in bitcoin.

Bitcoin in it assets class have it gains and loses, and the bold questions will be, if government take tax from bitcoin profits as assets,  what are their going to do when the assets also go ahead to make loses for the assets holder's.

Tax can work on assets that are more stable like Gold and others.

[Dr.Bitcoin_Strange]

Well, people hates tax but in a country where growth in the economy is continuous due to the tax the government are collecting and utilizing it on the development of the country and enhancement of the economy, then it makes sense to pay taxes since these taxes are used for development purposes which at the end still benefits the citizens.

In this contest that we are talking about capital gains tax, bitcoin and other crypto is regarded as an asset since the value and price can increase over time and if you make profit by holding these assets, when you sell off, you would have pay a tax accordingly if you are in countries that has a working system.

If perhaps you invested in any other asset apart from Bitcoin and you made profit when you sell off your investment, you will still have to pay tax, so it's just the same thing, when you make loss in any investment you are doing, the government does not compensate you, it's not done any where and Bitcoin is not also an exception. When you make losses, you handle it yourself but when you make profit, you are taxed. As a Bitcoin holder, if you only sell your Bitcoin via p2p or decentralized exchange, I guess you might escape capital gain tax but if you are using a centralized platform, you will be taxed and you will also give account of your asset.

[BlackHatCoiner]

What is your opinion about this?

This is the Fiat Standard in a nutshell. Inflation steals your purchasing power, pushing you to buy assets, and then you're paying tax on the appreciation of those assets due to inflation.

The capital gains tax is not bad at all until you realize how much effort you have to make to record EVERY SINGLE THING and as far as I know, some of the countries where you pay capital gains tax actually make you relay all this effort directly to the tax authority.

No, it's just criminal from top to bottom. You're taxing me for buying an asset that went up in value because faceless bankers print money and inflate everything? I did not elect those bankers. Why should I get taxed for their activities?

[CryptoHeadlineNews]

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?

This intended tax by government literally makes no sense at all, because to be frankly speaking, Bitcoin is a decentralized digital currency that operates on its own, and government aren't protecting it or neither offering any service for the growth and adoption of bitcoin, but yet they want to tax it. Forgetting the fact that this is a currency that has its own risk already, and by investing in it doesn't guarantee that you will make profit over a certain period of time due to its volatile nature that fluctuates up and down with respect to demand and supply.

And, as a result of this, the only thing I see this intended tax is likely to cause, is to make people to be more private with their Bitcoins on noncustodial wallets, and likewise use decentralized crypto exchange where they won't be taxed for using or owning Bitcoin.

[NeuroticFish]

There are 3 ways of taxing bitcoin (and crypto, heh).

1. Tax on the coins you hold. That's plain stupid, of course. (Boating accidents fix that).

2. Tax on pretty much every exchange you make, including crypto-to-crypto. Imho this is also stupid. (Long live non-KYK exchanges!)

3. Tax on exchanging bitcoin into fiat (on the the difference between the money you spent and the money you obtained). Well, this one I don't like, but it does make sense from the government perspective, since they consider cryptocurrencies investments, not currencies. Day trading is, after all, taxable, no offense. Even more, smarter governments don't tax the income after long term holding.

The capital gains tax is not bad at all until you realize how much effort you have to make to record EVERY SINGLE THING

Incredibly good point. But sadly the governments rarely care about the extra efforts of the average Joe. They just want the money.

[buwaytress]

If fiat can be in bank and no tax for spending it ~

Well there is, where I reside now, tax for fiat in a bank (above a certain threshold) as savings can be taxed (or rather, the interest earned is taxed). Or you spend it, it is part of income, then you pay tax on that. I'm not for it, but if bitcoin lives in the same legal space as fiat in that country, I suppose the same rules apply?

(I make no pretenses to understand how US and IRS works, it is continously evolving, as I understand)

[Cryptomultiplier]

Well, people hates tax but in a country where growth in the economy is continuous due to the tax the government are collecting and utilizing it on the development of the country and enhancement of the economy, then it makes sense to pay taxes since these taxes are used for development purposes which at the end still benefits the citizens.

In this contest that we are talking about capital gains tax, bitcoin and other crypto is regarded as an asset since the value and price can increase over time and if you make profit by holding these assets, when you sell off, you would have pay a tax accordingly if you are in countries that has a working system.

If perhaps you invested in any other asset apart from Bitcoin and you made profit when you sell off your investment, you will still have to pay tax, so it's just the same thing, when you make loss in any investment you are doing, the government does not compensate you, it's not done any where and Bitcoin is not also an exception. When you make losses, you handle it yourself but when you make profit, you are taxed. As a Bitcoin holder, if you only sell your Bitcoin via p2p or decentralized exchange, I guess you might escape capital gain tax but if you are using a centralized platform, you will be taxed and you will also give account of your asset.

Using a CEX is definitely going to get you taxed mostly as it is being regulated by government policies and there's KYC requirements and AML policies surrounding it. While the government makes it difficult to use Bitcoin as money because of the fiat currency, they leap at the chance of getting a piece of high volatility from crypto currency in form of revenue.

Many government today see Bitcoin as a a property that can be owned but when users decide to use it as mere money for transactions, it get hooked with how money is taxed and that's the bottom line.

[sonrevelio]

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

That's what they're doing, and they'll continue doing that. The taxes aren't there for extreme rich because they know the tactics to not pay any taxes but the ones who earn money by investing or by selling something will have to pay taxes.

I believe the taxes in general aren't for the elite class as they know all the ways to not pay any taxes. Now, it doesn't make sense to pay taxes for your Bitcoin that you're holding or the Bitcoin that you use to buy/sell goods. But what else we can expect from the governments?

I believe this is true. Governments will always do it. That's how they get the money from people which is also what they are going to pay the wages of people who work jobs that are connected to government (government job) while the rest will be to the government. My guess is that not all tax will be paid as wages to workers.

[Zlantann]

No, it's just criminal from top to bottom. You're taxing me for buying an asset that went up in value because faceless bankers print money and inflate everything? I did not elect those bankers. Why should I get taxed for their activities?

Some of these policies are the reason why people look for means to invade tax. Politicians have mastered the craft of avoiding taxes through offshore tax havens. But they want the common man who has discovered means of building a shield against inflation through Bitcoin to pay tax. It is a sad reality that the people would have to pay the price for the mistakes and failures of the government.

I believe this is true. Governments will always do it. That's how they get the money from people which is also what they are going to pay the wages of people who work jobs that are connected to government (government job) while the rest will be to the government. My guess is that not all tax will be paid as wages to workers.

This is also how top government officials get funds to finance their luxury lifestyles. The government doesn't need to tax the poor to death to carry out its basic functions. Corruption and incompetence are some of the reasons why the economy is in shambles and the first option is to seek ways to collect more money from the people through taxes.

[Fivestar4everMVP]

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?

This is not a new subject is you ask me, over the years, this tax thing has been something that alot of crypto people are talking about, and from all that I've learnt, there is no debating that the government don't care an inch for the people buying and holding crypto, it's not really their business whether you are making or losing money, all they care about is the Tax, simply because this is the only way they get to enrich themselves especially in countries like my own country where the government are known to he so corrupt they don't even have to hide it anymore.

Take gambling for example, someone will start gambling with $1000 for example and 3nd you losing this whole money, he will make another deposit of $1000 and still lose the whole money, he makes another deposit of $300 and luckily end up winning $200, the government now comes around demanding that this person pay tax on the $200 he won, what happened to the $2000 he previously lost to the same game? This scenerio can be applied to trading as well, this is why many see governments as nothing but thieves, broad day light criminals.

[PrivacyG]

The capital gains tax is not bad at all until you realize how much effort you have to make to record EVERY SINGLE THING and as far as I know, some of the countries where you pay capital gains tax actually make you relay all this effort directly to the tax authority.

No, it's just criminal from top to bottom. You're taxing me for buying an asset that went up in value because faceless bankers print money and inflate everything? I did not elect those bankers. Why should I get taxed for their activities?

In the ideal situation, which is actually supposed to be the theory that applies in real life too, taxes are paid so the world evolves.  I get the reason taxes exist.  We need smooth streets, clean parks, investments in all sorts of sectors et cetera.  Hospitals, schools, the list goes on.  And I believe you would be very willing and in fact possibly even excited to pay taxes if you saw it made a change.

This is the only reason I understand taxes.  But reality is very different.  Politicians are getting richer than ever before, some of the money we earn goes to bribes, off shore accounts, soon to be trillionaires et cetera.  The people who make the most money do not even pay tax so we end up having to pay more because they never pay theirs, and then out of our money a significant part goes to pockets of politicians and so on.  If we had few things to ever complain about and even those got solved rapidly, we would all want to make an effort.  But it is enough to read the news for today and just think how much of that tax goes to actually meaningful things.

Yes, in this kind of world I find it extremely justified to find ways to avoid paying taxes.  If billionaires can find ways to not pay millions in taxes then why would a broke person pay them.  Yes, in this kind of world taxes are criminal from top to bottom because they are a mechanism to feed pockets of criminals.  Joe Biden pardoned over 4 THOUSAND people.  With enough influence, you can be a criminal and be forgiven.  When life and society is not fair, I will not look for ways to play the game of fairness.  We are either all fair to each other or nobody is.

[8rch7]

Take gambling for example, someone will start gambling with $1000 for example and 3nd you losing this whole money, he will make another deposit of $1000 and still lose the whole money, he makes another deposit of $300 and luckily end up winning $200, the government now comes around demanding that this person pay tax on the $200 he won, what happened to the $2000 he previously lost to the same game? This scenerio can be applied to trading as well, this is why many see governments as nothing but thieves, broad day light criminals.

The government not care about how much previously loss but seeing the accumulate deposit amount count for tax transaction, its happening in my country right now trading at local exchange you must paying tax not matter your trading position get loss or profit. Its not fair when talking about tax in cryptocurrency exactly if any country has regulation adopt tax at local exchange market when the user make transaction for selling or buying cryptocurrency assets.
Its position we not earn profit yet and the government not care about our trading earn profit or cut loss but the tax can't avoid yet in our country we must pay around 0.2% for taxes every transaction selling or buy order.

[X-ray]

All the things that make tax complicated with bitcoin and doesn't make sense at all stem from the fact that the government refuse to recognize bitcoin as currency but instead only recognizing it as commodity.

It won't be resolved until governments are recognizing bitcoin as alternative currency.

[Darker45]

If Bitcoin is treated as an investment, bought and sold for a profit, then it's just right to be taxed, although I think there should be a threshold for it.

What doesn't make sense to me is when Bitcoin is taxed when you spend it or use it as money. That which you're buying is already taxed. It's unfair if the money you're using to pay for it would also be taxed. That's double taxation. That's simply too much.

I guess the problem is how Bitcoin is being unfairly defined, categorized, and regulated. Whether we accept it or not, Bitcoin isn't just like a piece of real estate property, or gold, shares of stocks, and the like. It's also being used as money. You don't tax money for being used to buy a piece of bread.

[BitGoba]

Bitcoin is peer-to-peer money. If you want to understand why Bitcoin is money and what money actually is, you should read Carl Mengers  “On the Origins of Money” or the books “ Bitcoin Standard” and “Broken Money.”

Of course, governments do not want you to understand what money is.They want you to use fiat currencies. Fiat currencies are not money. There is a difference between currency and money.Fiat means you are forced to use it by coercion, because in Latin the word fiat means “let it be done” or “it shall be.”Of course, they do not want to recognize Bitcoin as money. Instead, they frame it as a speculative asset, some kind of digital property, or even a Ponzi scheme for quick profit, where you supposedly sell it to a bigger fool for a higher price and then, of course, pay tax on the difference.

But once you go deeper down the Bitcoin rabbit hole, you begin to realize why  no sense to treat Bitcoin as a taxable asset, because Bitcoin is money, and money is a medium of exchange, a store of value, and a unit of account.

[Somegory]

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?

Right from day 1 and until the end of time, the government will always steal from his people, see the happiness on people's faces when Trump announced that there will be no tax on crypto?

They have other ways of extorting people legally, not on gun point but in a very stylish way that doesn't look like they are stealing from people, in my country the government is also planning to start taxing us, I am waiting patiently to see how they will do it.

I know that I can't win against the government but I am not ready to surrender either, nothing is moving forward here but the only thing they care about is taxing people who are making less every month.

[Pablo-wood]

Let's say someone spends bitcoin two to three times a day they will have to fill form 8949 for every purchase made with bitcoin. I see this as a big plot to discourage the use of bitcoin and it's already known that bitcoin users don't back down instead they will choose to hold.

Many people think taxing Bitcoin does not make sense because normal money is not taxed when you spend it the government taxes Bitcoin because it sees it as property, not currency. So if Bitcoin goes up in value and you spend it, they treat it like you made a profit, that is why using Bitcoin for everyday payments can become complicated. 

Assuming the had a compensation for spending bitcoin if it's value dropped at the point of making payment for purchase. Then the taxing would have even made a little sense. But here the government feels entitled to it's citizens crypto asset simply because it is volatile.

[Ahli38]

The government shouldn’t just focus on finding every possible way to collect money from its citizens through taxes. But they should also prioritize the well-being of its citizens. The government should be selective by requiring citizens to pay taxes only on profits without imposing taxes on those who incur losses. If the government mandates tax payments on every transaction or even the holding of Bitcoin by citizens without any consideration to alleviate the burden on taxpayers who are incurring losses then the government will be seen as greedy, where they will be seen as imposing unreasonable crypto taxes. And they will be seen as a corrupt government that is only looking for every possible way to extract money from its citizens. Government policies that place an undue burden on citizens must be criticized so that they align with the common interest of advancing the nation toward prosperity.

The government has being greedy right from nascent stage as an authority. What any citizens friendly government can do to help cryptocurrency investors is to create a safe environment for investors to feel secured, less manipulated or relatively scam free to bare minimum. It shouldn't just be a focus about imposing crypto tax gains on crypto investors.
As for corruption in government, there's no government that isn't corrupt IMO, it's just that some are more corrupt than others while some others are just "fantastically corrupt".

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.

[ZaryBee]

The government shouldn’t just focus on finding every possible way to collect money from its citizens through taxes. But they should also prioritize the well-being of its citizens. The government should be selective by requiring citizens to pay taxes only on profits without imposing taxes on those who incur losses. If the government mandates tax payments on every transaction or even the holding of Bitcoin by citizens without any consideration to alleviate the burden on taxpayers who are incurring losses then the government will be seen as greedy, where they will be seen as imposing unreasonable crypto taxes. And they will be seen as a corrupt government that is only looking for every possible way to extract money from its citizens. Government policies that place an undue burden on citizens must be criticized so that they align with the common interest of advancing the nation toward prosperity.

The government has being greedy right from nascent stage as an authority. What any citizens friendly government can do to help cryptocurrency investors is to create a safe environment for investors to feel secured, less manipulated or relatively scam free to bare minimum. It shouldn't just be a focus about imposing crypto tax gains on crypto investors.
As for corruption in government, there's no government that isn't corrupt IMO, it's just that some are more corrupt than others while some others are just "fantastically corrupt".

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.

[AmaGold70]

In most countries, the circulation of funds (both cash and non-cash) is not subject to VAT or income tax. However, governments and institutional players are not yet ready to recognize Bitcoin as a fully-fledged monetary instrument.🙋

Tax laws in various countries typically treat Bitcoin as either a financial asset or property. This raises the question of whether Bitcoin should be taxed. However, even if Bitcoin is recognized as a financial asset, in my opinion, it is much more logical to levy income tax at the time of sale. This should take into account both the taxpayer's income and expenses (i.e., the cost of purchasing Bitcoin). From a tax fairness perspective, it would also be appropriate to include losses from the sale (which arose in previous years).

As for capital gains tax (regarding Bitcoin ownership), this measure, in my opinion, represents direct aggression by the state against Bitcoin owners.  If your country has a capital gains tax, it's a safe bet the government wants to stop this technology from developing.🤷

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.