Tax Benefits for Bitcoin Businesses in Belarus Extended Until 2025

April 1, 2023 Bitcoin.com

French Authorities Raid 5 Major Banks Over Accusations of Money Laundering and Fiscal Fraud

March 28, 2023 Bitcoin.com

Biden’s policy on crypto taxation undermines his environmental goals

March 27, 2023 Coin Telegraph

We don’t tax houses while they’re under construction, and we shouldn’t impose taxes on cryptocurrency while it’s staked.

Gains accrued by staking cryptocurrency should not be treated as a taxable event. It only makes sense to tax such gains upon their conversion to legal tender currency. To do otherwise undermines a marquee environmental policy from the administration of United States President Joe Biden.

The Internal Revenue Service appears strongly inclined to treat staking gains as immediate income. The penalties for getting sideways with the IRS can be draconian. And taxing, or threatening to tax, staking gains is bad policy — and, ahem, bad politics.

There are many excellent reasons not to treat staking gains in and of themselves as taxable events. The best reason is to put the IRS back in line with White House environmental policy to fight climate change.

If the IRS won’t administratively comply with the Biden administration’s clearly stated marquee policy, it’s time for Congress to clarify the law and prohibit the taxing of unrealized gains.

Deferring gains until sale merely defers receipt of taxes by the Treasury. It doesn’t cost the government even one thin satoshi. So, what’s going on?

Crypto is legitimately subject to taxes in many ways. You’ll pay taxes when you sell your crypto, or even exchange it for other forms of crypto. (Elsewhere, we have called upon Congress to enact a deferral for crypto-to-crypto exchanges, a subject beyond the scope of this article.)

Taxing staking gains is antithetical to a clearly expressed marquee White House policy. It’s also antithetical to generally accepted notions of good tax policy.

Uncle Sam does not tax Jasper Johns while turning a blank canvas into a multimillion-dollar artwork. He is not taxed when he consigns it to a gallery for sale at a posted price. He gets taxed when he is given the million-dollar check for his latest masterpiece.

This obviously makes sense. Uncle Sam won’t take a piece of a painting (or even a fractional interest therein) in payment of taxes. How would an artist be expected to pay the tax on a work-in-progress or a work merely listed for sale? Taxing artworks during their creation would be ridiculous!

Uncle Sam does not tax a building contractor while building a home, nor even when he turns it over to a realtor for sale. The IRS collects taxes upon sale.

This obviously makes sense. One can only guess at an asset’s value until it’s sold, and even then, one doesn’t have the cash to pay the taxes until sale proceeds are received. Moreover, the IRS doesn’t “do windows” — or take lumber or any other in-kind payment of taxes. Taxing housing under construction would be preposterous!

Taxing staking gains while they are in process is nonsensical and inconsistent with the treatment of other created assets. The IRS has staked out a real Alice in Wonderland policy on this one. And taxing such gains does Americans, and America, real damage, driving wealth creation and good jobs offshore (against stated presidential policy)!

Yet perhaps the most compelling reason for the IRS to stop taxing staking gains — and, if it does not, for Congress promptly to fix this — is that President Biden has made reducing CO2 emissions a signature administration priority.

The IRS taxing staking gains upon occurrence (rather than upon sale or exchange of those gains) badly undermines two of the administration’s top priorities: onshoring good jobs and fighting climate change. Bureaucracy trumps democracy? Shameful!

Support from Democrats on the Hill for their party’s leader for forbidding taxing staking gains may be assumed. And there are certainly enough sophisticated Republican Congresspersons to pass a law forbidding the taxing of staking gains.

So, what (no pun intended) is at stake? Proof-of-work crypto uses vastly more energy, generating vastly more emissions than proof-of-stake. Per the White House’s Office of Science and Technology fact sheet dated Sept. 8, 2022:

“From 2018 to 2022, annualized electricity usage from global crypto-assets grew rapidly, with estimates of electricity usage doubling to quadrupling. [...] Switching to alternative crypto-asset technologies such as Proof of Stake could dramatically reduce overall power usage to less than 1% of today’s levels.”

Taxing those gains before they are realized will also cripple the movement to proof-of-stake.

To summarize, there are intractable practical problems in taxing an asset at its creation. People can only guess the value of an asset until sold. The IRS doesn’t accept payment in kind (were that even possible, as frequently it’s not).

Many taxpayers don’t have the actual cash to pay their taxes until realizing the proceeds of sale. It is cruel and counterproductive to turn honorable citizens into tax cheats and criminals via bad regulation. It will drive crypto, and the attendant jobs and wealth creation, out of the United States. And deferring taxation until sale postpones but does not cost the government any tax revenue.

Most of all, the treatment of staking gains as a taxable event undermines the Biden administration’s stated top priority of onshoring jobs and reducing CO2 emissions.

Stop treating staking gains as a taxable event! If Biden and the IRS turn a deaf ear, Congress should take up the issue.

Todd White is the founder of the American Blockchain PAC. Ralph Benko is senior counselor to the group.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

What is fiscal policy, and why does it matter?

March 25, 2023 Coin Telegraph

Borrowing

Fiscal policy shapes economies through government spending, taxation and borrowing.

Fiscal policy is a tool used by governments to regulate economic activities in their country. It involves the use of government spending, taxation and borrowing to influence economic growth, stabilize inflation and maintain a stable economy. This article will explain what fiscal policy is, how it works, and why it is important.

What is fiscal policy?

Fiscal policy is a tool used by governments to regulate economic activities in their country. It is one of the two main categories of economic policy, along with monetary policy. The main goal of fiscal policy is to control the economy through government spending and taxation.

How does fiscal policy work?

The government has a number of ways to affect the economy through fiscal policy. One of the primary methods used is government spending. The government may boost economic activity and create jobs by raising spending, which will add more money to the economy.

Another way that fiscal policy works is through taxation. The government can boost disposable income, which in turn can boost consumer spending, by decreasing taxes. This could encourage economic expansion and boost activity.

Important old chart of mine.

Fiscal policy created inflation to a much larger extent than QE pic.twitter.com/zeT5jLqwVA
— AndreasStenoLarsen (@AndreasSteno) March 18, 2023

Finally, fiscal policy is also used for controlling inflation. If the government considers inflation to be a concern, it may raise taxes or cut spending, both of which could help to lower demand and limit inflation.

Why is fiscal policy important?

Fiscal policy is important because it can have a significant impact on the economy. By adjusting government spending and taxation, the government can influence economic growth, inflation and employment levels.

Stimulating economic growth

The promotion of economic growth is one of fiscal policy’s main goals. The government can promote economic activity and employment by raising spending. As a result, there may be an increase in tax collections and corporate and individual chances for growth in the economy.

Regulating inflation

Inflation control is another key responsibility of fiscal policy. When there is an excess of money chasing an insufficient amount of goods, inflation can result in price increases. The government can lower demand by altering expenditure and taxation, which can aid in reducing inflation.

Reducing employment

Furthermore, fiscal policy can be used to reduce unemployment. The government can promote economic activity and employment by raising spending. As a result, there may be less unemployment and more options for employment.

Managing debt

Fiscal policy can also be used to manage government debt. By adjusting government spending and taxation, the government can influence the amount of money it borrows. This can help manage the government’s debt levels and ensure that it is able to meet its financial obligations.

➡️ New: Legislature's personal income tax & corporate tax proposals would raise between $1.6 – $2.1 billion:

• Senate & Assembly income tax increase: $710M

• Assembly corporate tax increase: $1.2B for MTA & other transit

• Senate corporate tax MTA surcharge: $930M for MTA pic.twitter.com/zj4gYE319K
— Fiscal Policy Institute (@NYFiscalPolicy) March 16, 2023

Do cryptocurrencies have a fiscal policy?

Due to their decentralization and lack of centralized management, cryptocurrencies do not have a fiscal policy in the conventional sense. Yet the supply and demand of some cryptocurrencies may be impacted by the fact that they may have their own distinct monetary policies and rules written into their code.

For example, Bitcoin (BTC) has a fixed maximum supply of 21 million coins, which is hardcoded into its blockchain protocol. This means that no more than 21 million BTC can ever be created, and this limit helps to regulate its supply and demand.

Even though cryptocurrencies lack a traditional fiscal policy, the rules and protocols incorporated into their coding can nonetheless significantly affect their adoption and value. For instance, alterations to the supply or consensus algorithm of a cryptocurrency may have an impact on its security and scarcity, which may have an impact on its price and market demand.

Magazine: Best and worst countries for crypto taxes — Plus crypto tax tips