On Monday, President Joe Biden unveiled a budget proposal with eye-catching measures aimed at the cryptocurrency sector. The administration believes these steps could bring in substantial government revenue. At the heart of the proposal are plans to make digital assets subject to wash sale rules, add an excise tax on crypto mining, and tighten reporting requirements for those dealing in digital currencies.
Furthermore, the proposal seeks to bring cryptocurrencies under the umbrella of existing financial regulations. This includes reporting for foreign crypto accounts and applying mark-to-market rules to digital currencies. The administration expects these measures to bring in nearly $10 billion in 2025. They forecast over $42 billion in tax revenues from these initiatives over the next ten years.
Tax Reforms and Revenue Projections
The budget proposal outlines specific tax reforms that are significant for digital asset transactions. For instance, applying wash sale rules to cryptocurrencies could net over $1 billion in the fiscal year 2025. Also, including cryptocurrencies in mark-to-market rules could yield more than $8 billion by the same year. Combined, these efforts are projected to boost federal revenues by $32.3 billion over ten years.
Moreover, the proposed excise tax on crypto mining could cut the national deficit by about $7 billion in the next decade. It’s worth noting that these are not entirely new ideas. The Biden administration had proposed similar tax measures in last year’s budget, which Congress did not pass.
The broader goal of these proposals is to close tax loopholes and increase revenues from the wealthy and large corporations. The budget also targets other areas for reform. These include the “like-kind exchange loophole,” misuse of tax-preferred retirement incentives, and a tax break for corporate jets. The aim is to create a fairer tax system for all.
In summary, the Biden administration’s latest budget proposal puts the spotlight on the cryptocurrency sector. Through various measures, it seeks to harness this digital economy for increased tax revenue, aiming for fairness and fiscal responsibility.
