President Biden's 2024 tax plan targets crypto wash trading and capital gains

President Biden's 2024 tax plan targets crypto wash trading and capital gains

US President Joe Biden released his official 2024 budget plan this Thursday – and cryptocurrency transactions are in the crosshairs.

Among his many proposals is subjecting crypto to the same wash-sale rules as stocks and bonds while increasing capital gains taxes on the wealthiest Americans.

Biden's budget plan

The plan according to whichWhite Housewill help reduce budget deficits by $3 trillion over the next decade through a series of corporate tax hikes and government spending cuts, despite a higher-than-expected defense budget of $835 billion.

The government's tax priorities include quadrupling taxes on share buybacks from 1% to 4%. Meanwhile, capital gains are taxed at the same rate as wage income for those earning more than $1 million per year.

The plan would also close the “like-kind exchange” loophole, allowing crypto traders to sell their underwater crypto investments, claim a deductible loss, and immediately buy back their tokens. Estimates from theWall Street Journalsuggest this could support $24 billion for the government.

The budget aims to undo many of the tax changes introduced by the Trump administration, which cut effective corporate tax rates to below 10%.

“The budget would set the corporate tax rate at 28 percent, still well below 35Percentage in effect before the 2017 tax law," Biden wrote. "This tax rate change is complemented by other proposals to incentivize job creation andInvest in the United States and make sure big companies pay their fair share.”

The President remains committed to not making tax changes that affect those earning less than $400,000 per year.

The government claims its plan will stabilize the budget deficit at about 5% of GDP, as opposed to 6% without the president's policies. Last month Mike Pence, vice president of the Trump administrationrecommendedthat persistent deficits put the United States on a course for a debt crisis in the next few decades.

Problems with Bitcoin taxation

In 2021, Biden introduced infrastructure legislationcontroversial politicsto expand tax reporting requirements for cryptocurrency “brokers,” the loose definition of which could technically apply to miners, validators, and developers. Crypto-supporting senators like Pat Toomey and Cynthia Lummis have promised that this language will be revised at a later date.

In draft laws, Lummis toorecommendedExclusion of Bitcoin transactions under $200 from capital gains tax to better enable their use as a means of payment.

.