U.S. President Joe Biden's proposal to potentially increase capital gains taxes to 44.6%, marking the highest rate in U.S. history, might not significantly impact the average cryptocurrency investor, according to Matthew Walrath, founder of Crypto Tax Made Easy. Walrath suggested that for most people in the cryptocurrency space, the proposed tax hike would likely be inconsequential, even if it were to become law. He likened it to a "dumb burger" for the majority of investors, characterizing it as essentially just a suggestion.
While the proposed tax rate has been public knowledge for over a month, it, along with an additional proposal to levy a 25% tax on unrealized gains, has garnered considerable attention on social media platforms. The widely quoted figure of 44.6% was introduced in a March 11 Treasury explanatory document, indicating that it was proposed in two separate plans, one aimed at increasing the top ordinary tax rate and the other at modifying the Investment Income Tax Rate.
Tax experts note that the impact of Biden's tax proposals is primarily targeted at high-income earners, specifically those with incomes exceeding $400,000 or more. Individuals falling within this bracket would be the primary focus of the proposed tax adjustments. Conversely, the average annual income for international cryptocurrency investors, as estimated by crypto payments company TripleA, hovers around $25,000. However, it's important to note that this figure encompasses data from countries with lower average incomes compared to the United States.
Furthermore, Biden's federal budget proposal also includes a provision for a 25% tax on unrealized gains, primarily targeting ultra-high net worth individuals. Notably, this tax would apply to taxpayers with a net worth exceeding $100 million, according to tax analysts at consulting firm Grant Thornton. Walrath humorously remarked that such proposals wouldn't have much impact on the cryptocurrency community, quipping that it's unlikely to ruffle any feathers on "crypto Twitter."
Ultimately, Walrath views Biden's tax proposals as part of a political strategy aimed at appealing to low-income voters. He suggests that such measures could be perceived as political posturing by the Democratic Party, portraying them as taking action against wealthier individuals to garner support from lower-income and less-educated demographics.
