Biden's Crypto Tax Policy Threatens Environmental Goals
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Biden's Crypto Tax Policy Threatens Environmental Goals

written by John Murphy | March 28, 2023

We do not tax homes under construction, nor should we tax them while cryptocurrency is wagered. 

Profit from cryptocurrency staking should not be treated as a taxable event. It makes sense to tax such profits only when converted into fiat currency. Anything else undermines the well-established environmental policies of the Joe Biden administration.

Key Takeaways

  • Wagering winnings are not taxable events for valid reasons. 
  • Stake profits are taxed against White House policy. 
  • Construction of houses is not taxed by Uncle Sam, even if they go to realtors. 

The Internal Revenue Service seems more inclined to treat staking profits as immediate income. The IRS penalties for lateral movement can be very severe, and taxing or threatening to tax a stake’s profits is a terrible and bad policy. 

There are many valid reasons for not treating winnings from wagering as a chargeable event. The first reason is to align the IRS with White House environmental policy and fight climate change.  

It’s time for Congress to clarify the law and ban taxing unrealized profits if the IRS adheres to the Biden administration’s marquee policy. 

Taxing stake profits is against the clearly stated White House marquee policy. It also contradicts commonly accepted notions of reasonable taxation. 

Uncle Sam doesn’t tax Jasper Johns. Turn a blank canvas into a multi-million-dollar work of art. He is not taxed if he sells to the gallery at the total price. He is taxed when he receives a million-dollar check for his latest masterpiece.  

It makes sense. Uncle Sam does not receive part of the painting (or part of it) as tax. How should an artist pay taxes for work in progress or sale only? It would be silly to tax a work of art when it is created. 

Uncle Sam doesn’t tax the builders on the construction of the house, even when he sells it to realtors. The IRS collects taxes at the time of sale.  

Taxing stake profits during the process is pointless and inconsistent with the treatment of other assets created. The IRS has an Alice in Wonderland policy here. And taxing such profits does actual harm to Americans and Americans, promoting wealth creation and good jobs abroad (contrary to Presidential policy)!  

As President Biden has made carbon emissions reduction a priority for his administration, the IRS should stop taxing stock earnings. 

An IRS that taxes profits when made (rather than when profits are sold or traded) undermine two of the administration’s top priorities.

Attracting good jobs and fighting climate change. Will bureaucracy beat democracy? Embarrassing! 

We can only assume that there are some Democrats who support the Democratic leader to ban taxing gambling winnings and there are certainly enough experienced Republican congressmen to pass legislation to ban taxing wagers. 

So what’s wrong (no pun intended)? There is a significant difference in the energy consumption and emissions produced by proof-of-work cryptos and proof-of-stake cryptos. The White House Office of Science and Technology released a fact sheet on September 8, 2022.

Many taxpayers only have the money to pay their taxes once they realize the sale proceeds. Using bad regulation to turn honorable citizens into tax fraudsters and criminals is cruel and counterproductive.

It will drive cryptocurrency and related jobs and wealth creation out of the United States. Also, deferring taxation until the sale delays the state but does not reduce tax revenue.