Friday, December 3

US senator wants inflation-linked tax on cryptocurrencies

A US senator made a bold proposal to create an inflation-linked tax on cryptocurrencies and NFTs.

According to the proposal, this would allow more people to invest in the sector, since in the current model investors are not brave enough to invest in the financial market.

Call “Capital Gains Inflation Relief Act“, or in the literal translation “Capital Gains Inflation Relief Law”, the proposal was presented last Wednesday (3), both in the Federal Senate and in the House of Representatives, the two chambers of the US Congress.

It is worth remembering that annualized inflation in the United States is at 5.4%, the highest rate for the period since the 2008 crisis. Used cars and trucks, for example, appreciated 24.6%, as did meat 12 .6% and gasoline 42.6%, all in the largest economy in the world.

What does the law that provides for an inflation-linked tax for cryptocurrencies say?

In the view of many people, inflation is a tax, as when the government prints money to meet its needs, it pushes the value of the fiat currency down in relation to various assets.

In recent months, the Fed in the United States printed a lot of money and offered it as benefits to the population, either for benefits or even easier loans.

However, now the bill has started to reach the poorest, and many can no longer even save money, as the value of consumption has increased. Going to the supermarket, for example, became a frustrating practice, with a constant increase in the price of items necessary for survival.

A new law presented then would be a way of trying to get people to invest again and save money. According to Senator Ted Cruz, who presented the bill, it should protect the population from the harmful effects of inflation.

The government’s inflation crisis is causing prices to soar, destroying the purchasing power of Americans’ hard-earned dollars. By indexing the cost base of capital assets to inflation, we are protecting American workers from being punished by the cruel inflation tax created by this government’s reckless spending. This law would promote savings and investment, encouraging people to save for things like a child’s college education and for retirement, and it would help job creators hire more people and raise wages when Americans need it most. I will continue to lead the Senate fight for a fairer, simpler tax code and fiscal health as this government threatens to destroy Americans’ wealth“.

The deputy who presented the bill in the House of Representatives, on the other hand, said that inflation is an invisible tax.

“As Biden’s economy continues to spiral, it is critical that Congress make every effort to protect the value of hard-earned US dollars. Adjusting the tax code to account for price increases by indexing the capital gains tax base for inflation is a simple first step to defend Americans from the invisible tax of inflation.”

Politicians who argue that there is no better time to pass this law, as inflation is at a dangerous level for many people.

How is it today in the United States?

Currently, the US Department of the Treasury requires capital gains taxes to be paid at the price at the time of purchase. Thus, the adjusted cost of assets by asset inflation in dollars is not considered.

When an investor decides to sell his asset, he must pay tax on the gain, even if the value only grew to keep up with inflation. If the measure is approved, it should even include cryptocurrencies and NFTs, investors will only pay taxes on these assets if they exceed the amount of inflation.