Kanalcoin.com – The President of the United States, Joe Biden, finally issued a plan to increase the taxes on investment gain (capital gain) for US residents who earn over $1 million. The proposal to change the tax percentage that he put forward a few days ago was carried out as an effort to realize his economic policy agenda.
The tax is imposed on the super-rich in the US will then be used to free education costs, develop environmentally friendly infrastructure, and improve health facilities.
The tax rate, which was previously around 20 percent, will almost double to 39.6 percent and if additional taxes are included, the percentage will be 43.4 percent.
Experts are starting to show their concern over the impact it might have on the cryptocurrency world after investors enjoyed huge profits for at least the past year.
Data reported from tradingview.com by Kanalcoin.com via cointelegraph.com shows the bitcoin price plummeted from $50,000 to $47,500 on Friday (23/04/2021). This is the first time the bitcoin price has fallen below $50k since early March. In addition, Ether (ETH), as the second largest digital currency, slumped in value to touch the figure of $2,191 followed by XRP, Stellar, and Cardano.
Furthermore, there was a massive increase in share-off transactions by investors before the tax increase was implemented. The S&P 500 index, the benchmark index of the 500 most influential companies in America, closed lower with a 1 percent decline on the same day. This decline is the worst in more than a month.
Several well-known investors including a billionaire company financier named Tim Draper criticized the steps taken by the number one person in America. He said as a result, investment in the digital money market will be increasingly constrained.
This statement is supported by the communication advisor of the Blockchain Association that the optimal percentage of taxes should only be around 28 percent according to the congressional budget.
“Implementation of taxes beyond that range indirectly forces investors to hold their assets longer,” the Blockchain Association communications adviser said via Cointelegraph.
On the other hand, Brett Cotler, a blockchain practitioner said the income earned from certain crypto assets will not be affected at all by any policy.
“Many crypto traders are trading on a fast turnaround where their profits are short term. Any changes in tax enforcement should have no effect. This is different from investors who hold their assets for more than a year,” said Cotler.
“There are many ways to minimize the effect of the capital gains tax increase, including crypto investments through tax-advantaged accounts such as accounts for retirement funds, health savings accounts, and others,” Cloter concluded.