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Here is what we prepared for you:

  • Biden’s newly proposed tax rates on unrealized gains.
  • Thanks, they are not targeting the average earning degen
  • But if you are a bigshot-degen with a fat bank account, you might fall within the bracket.

U.S President Joe Biden’s newly proposed capital gains tax is the highest in the nation’s history but will not affect cryptocurrency users even if passed into law. The proposal suggests taxing unrealized gains an additional 25% thereby pushing the tax to 44.6%. This figure has been widely referenced on social media since introduction on March 11. 


Approval Depends on Two Separate Proposals

While commenting about the matter, Crypto Tax Made Easy founder Mathew Walrath said the new tax aims to increase long-term capital gains taxation on individuals earning more than $1 million per year. However, the Treasury explained in one of the documents that the tax would only become effective if lawmakers approved two separate proposals. 

Source: Department of Treasury

One of these proposals advocates for raising the tax rate of investment income while the second one wants to increase the rate for top ordinary earners. As you can see, even if these proposals aim to increase the tax rate on unrealized gains they will not affect the average cryptocurrency trader/investor. 

Net Investment Income Tax and Federal Tax for High-Income Earners

Cryptocurrency taxation expert SqueezeTaxes said the taxation proposals were another headline catfish that stirred massive reaction online before diving into the true impact of the suggestions on U.S citizens. 

He also explained the legislation would center around raising the Net Investment Income Tax to 5% and the largest federal tax bracket to 39.6%. By combining these figures, SqueezeTaxes explained, this is how we are getting 44.6%. However, this will affect the average income earner since the proposals target high-income earners who bag $400,000 to $1 million per year. 

TripleA, a crypto payments company released data showing the average crypto investor globally earns less than $25,000. The data demonstrated that this figure also represents crypto earners in countries that have lower average incomes compared to the United States.

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President Biden’s Federal Budget also proposed a 25% tax on capital gains for ultra-wealthy individuals. X users pushed back the proposals with X’s Jason Williams describing them as insane and could easily crush America’s economy. 

However, a report from Grant Thornton tax advisory firm said the president’s proposal was only to tax individuals with over $100 million worth of net assets. Meanwhile, there are those who see the new proposals as a political move to impress low-income earners’ voter base. According to Walrath, Democrats have kind of turned wealthy individuals against them and they are probably attempting to lure a voter base consisting of low-education and low-income earners.

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