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The online crypto community is busy with discussion about a proposed 1% wealth tax on large holders of Bitcoin (BTC). While there is no official confirmation of such a policy, the rumors have gained widespread attention in light of a recent letter sent to United States President Joe Biden.
Rumored 1% wealth tax on crypto
The fake letter reportedly signed by Senator Elizabeth Warren targets crypto transactions from large holders, often referred to as whales. The legislative proposal seeks to address regulatory challenges posed by the growing adoption of crypto.
The proposal highlights that individuals or corporate bodies holding cryptocurrencies valued at over $1,000 would be required to report such holdings to the Internal Revenue Service (IRS) yearly. Furthermore, the bill seeks to impose a 1% wealth tax on entities holding digital assets exceeding $500,000.
Some individuals commented that the 1% tax could be part of an effort from the government to regulate the market and prevent whales from manipulating the price of Bitcoin.
However, the bill, which has been dispelled as false, is intended to address the growing inequalities in the United States. According to the proposal, individuals and entities holding substantial wealth in the form of crypto are expected to contribute their quota to support public services and investments.
Understanding crypto tax in U.S.
As previously disclosed by U.Today, cryptocurrencies are classified as capital assets by the IRS in the U.S. Simply explained, any gains or losses from buying, selling or exchanging cryptocurrencies are treated as capital gains or losses.
In 2021, the Biden administration dropped a tax proposal aiming to increase the capital gains tax rate to 43.4% for citizens whose income exceeds $1 million. The proposal had been met with a lot of criticism. Renowned venture capitalist Tim Draper claimed that it could kill “the golden goose that is America.”