Don't Mess With Taxes

The Capitol Hill debate over how cryptocurrency taxes fit into the funding of the infrastructure bill continues.

Most Americans, however, already have decided that stronger Internal Revenue Service oversight of digital asset transactions are OK.

Virtual assets meet the infrastructure road: Part of the payment of the $1 trillion infrastructure measure now before the Senate would come from stricter enforcement of cryptocurrency transactions.

The Internal Revenue Service considers virtual currency a capital asset, meaning potential taxes when transactions produce a profit. The agency has ramped up efforts to track virtual currency moves in recent year.

A provision in the infrastructure bill would help that effort by increasing third-party reporting of such transactions. Specifically, cryptocurrency brokers would be required to report such things as purchase and sales prices, transfers between brokers, and transactions of more than $10,000 to the IRS.

You can read more about the funding battle in my earlier (then updated) post, Cryptocurrency's big week: a rider in infrastructure bill & target of SEC regulatory interest.

Divergent levels of crypto concern: As that blog item notes, some Senators are concerned that the original broker reporting proposal was too broad. Those concerns and efforts to narrow the reporting scope are being hashed out.

Most Americans, however, say just do it, according to a recent Morning Consult/Politico poll.

Poll conducted July 31-Aug. 2, 2021, among 1,998 registered voters, with a margin of error of +/-2%. Figures may not add up to 100% due to rounding.

The survey found that Democrats were the most supportive of the enhanced cryptocurrency reporting, with 62 percent approving the proposal. But a 43 percent plurality of Republicans also approved.

A third of GOP voters said they oppose the idea, compared to 15 percent of Democrats.

Not my tax problem: I'm not trying to read voters' and/or poll participants' minds. I'm not that crazy!

But I suspect that the reason most folks find potential new virtual currency taxes — the Joint Committee on Taxation estimates that the added tax information would bring in $28 billion over the next 10 years — a good idea is because they won't be affected.

Most people don't dally in crypto. Heck, most people don't even have any holdings in the stock market beyond their workplace 401(k) plans.

So they're okay with the famous tax direction of the late Louisiana Democratic Sen. Russell B. Long:

Don't tax you, don't tax me,
tax that fellow behind the tree.

Photo by borchee via iStock

You also might find these items of interest:

• A lot of taxes, but not a lot of trees to hide behind
• What cryptocurrency's booming values mean to owners' taxes
• IRS commissioner says Tax Gap likely $1 trillion, thanks largely to cryptocurrency

Advertisements