US budget draft wants to eliminate crypto investment tax deductions for losses

To reduce the budget deficit, the US administration intends to remove the tax deduction from losing crypto investments.

Biden administration draft budget wants to tighten crypto investment tax

According to Wall Street JournalUS President Joe Biden’s 2024 budget draft will have many measures to save federal government spending, with projections reaching hundreds of billions of dollars.

The White House wants to reduce the allocation of money to the health benefit program in partnership with insurance companies, reduce the price of drugs that the state must buy for the Medicare program, and have the power to negotiate drug prices with the government. pharmaceutical companies.

Next, the Biden administration wants to increase income taxes on hedge fund managers, reduce benefits for the retirement accounts of the super-rich. The measure to raise corporate income tax will be applied to companies in the oil and gas industry.

The White House also wants to open investigations and collect deficits from COVID-19 pandemic prevention spending.

One notable proposal is the abolition of tax deductions for loss-making crypto investments. Currently, crypto investors are able to sell assets at a lower price than the purchase price, declare a loss and get tax deductions from it up to a maximum amount of $3,000, and then buy back the crypto. Bitcoin investment company MicroStrategy is said to have taken advantage of this loophole by selling BTC in December, then quickly buying it back.

Officials say this is unreasonable and should be excluded like the anti-wash trading regulation on securities. The US government estimates it could increase revenue by $24 billion by eliminating tax deductions for losses.

The changes to crypto tax regulations come as the US prepares to enter the tax filing and payment season for fiscal year 2022, which usually takes place during the March and April period of each year. 2022 is an extremely difficult time for the crypto market, as many chain collapses in the market have caused a series of companies to go bankrupt and drag the prices of many leading cryptocurrencies down, causing damage to the industry. many investors.

In the opposite direction, Mr. Biden wants to continue to increase the 2024 defense budget to $ 835 billion to deal with the conflict in Ukraine and tensions with China. In addition, the President proposed a 5.2% salary increase for federal government employees.

However, observers say the above adjustments will certainly face stiff opposition in the House of Representatives, which was recaptured by Republicans in the last election. In addition, some of Mr. Biden’s proposals are considered too radical and even unpopular with the US Congress when proposed in 2022, when both the Senate and the House of Representatives are still held by Democrats. majority.

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