Treasury Secretary Janet Yellen of the United States has proposed a new tax on unrealized capital gains. Secretary Yellen announced on CNN’s “State of the Union” on Oct 24 that they were looking to explore additional taxes on the ultra-wealthy.
However, a portion of the plans included a tax on unrealized capital gains. This implies that holders of cryptocurrencies or equities may be taxed on gains before the assets are sold. Additionally, it is possible that an increase in property values will be taxed even before the property is sold.
Senator Wyden and the Senate Finance Committee are considering a plan that would levy a tax on unrealized capital gains… on liquid assets owned by very affluent persons, billionaires. That is hardly a wealth tax, in my opinion.
She said that affluent persons often evade taxes until they are discovered, and this would be a method of pursuing their possessions. It was unclear if the newly proposed tax would be applicable to all holders of liquid assets or just to those above a certain level.
The move was not warmly received by the crypto community, since profits are sometimes unrealized until assets are sold and money is removed. The new tax might have a significant effect on people with just a few bitcoins at present levels.
Mr. Whale, a well-known crypto critic, commented: Janet Yellen’s consideration of an unrealized capital gains tax exemplifies exactly the horrific economic catastrophe we are in. They are prepared to destroy every investor sentiment in order to obtain money to finance their irresponsible spending binge.
Many were also concerned about the impact of the newly planned tax regime on unrealized losses. This occurs when an item is less valuable than the purchase price but has not been sold.
Cryptocurrency and banking opposition Senator Elizabeth Warren also claimed that she was “aggressively pursuing” the idea of a wealth tax to assist President Biden’s Build Back Better program. She declared on Sunday that Americans understand, adding:
They are cognizant of the fact that the system is rigged. Teachers, nurses, and firemen are just fed up with paying more taxes than Jeff Bezos does.
While taxing billionaires is an admirable goal, US policymakers must exercise caution to avoid throwing the baby out with the bathwater. This is basically what a new tax on unrealized investment earnings would accomplish.
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