A tax cut proposed by US President Donald Trump could be a huge victoryor a relatively insignificant victory for the cryptocurrency industry, if approved.
At a press conference in the White House earlier this week, the President Trump said his administration was “very serious” about a tax cut on investment income.
“We’re also considering lowering capital gains tax, which would create a lot more jobs.”
There is debate about the extent of President Trump’s ability to cut taxes. The long-term capital gain rate of 20% is primarily governed by Congress. So to get a big cut, you’d have to have the legislature on your side through negotiation..
Alternatively, an executive order could be used to lower tax burdens, known as indexing capital gains to inflation. This means, The original purchase price of an asset is adjusted when it is sold so that no tax is paid on the inflation-related appreciation, according to Bloomberg. This would be of far less benefit to tradersSince crypto earnings can make the CPI seem insignificant.
The current state of US cryptocurrency taxes
Taxes in the United States are a minefield. Americans are required to report profits and losses on every crypto transaction or when they earn crypto by staking, whether or not they made a profit.
The Internal Revenue Service or IRS identifies cryptocurrencies as property, not currencies, so they must be reported. Failure to report any income from the sale of digital assets could result in penalties and interest for unpaid taxes.
The IRS also states that Wages paid to employees in cryptocurrencies are subject to withholding tax and federal wage tax.
As Cointelegraph reported earlier this month, The IRS is getting a lot smarter at tracking cryptocurrency taxes. As the rewards of wagering gain momentum, U.S. tax authorities are keeping pace with the game.
The upcoming launch of participation in Ethereum 2 will be a capital gains nightmare for those involvedThe recipients must record the current amount and price of the awards each time they are distributed.
If Donald Trump succeeds in pushing his proposal to at least lower taxes on capital gains offers the opportunity to keep a little more of the earnings after completing the registration and documents.