After big sell-offs in the cryptocurrency markets following the announcement of US President Joe Biden’s proposal to increase capital gains taxes last week, the Biden administration defended a near-doubling of the tax levy only for the very, very, very rich.
A senior official in the Biden administration said only 0.3 percent of American taxpayers would face higher taxes on their investments under the new capital gains tax plan.
It is becoming increasingly clear that in recent years many of the returns at the top were actually higher than market returns, rents, etc. Raising taxes on people who are doing very well in the economy is a way to demand more, a Biden administration official told the Financial Times on Monday.
Under Mr. Biden’s plan, the capital gains tax rate for high net worth individuals would be increased from the current 20 percent to 39.6 percent. For those earning $1 million or more, the new top rate will be accompanied by the existing additional tax, bringing the US tax rate on income and dividends to 43.4%.
A Biden administration official said the new plan is consistent with Biden’s pre-election position that we need to fundamentally reform the parts of the law that affect very, very wealthy or very high-income Americans.
The crypto and US equity markets have seen significant selling since Biden’s proposal, amid growing speculation and FUD – exploit, uncertainty and doubt – that investors will sell stocks before a higher tax rate takes effect. Bitcoin (BTC) has been facing heavy selling pressure, which pushed the price below the $50,000 support level on Friday and hit a low of $47,500. The US stock market also suffered significant losses on Thursday, but recovered quickly.
Some investors, including billionaire venture capitalist Tim Draper, have criticized the new tax plan. Renowned cryptologist Draper has argued that a capital gains tax of 43.4 percent could kill America’s golden goose, while taxes in California could rise to 56.4 percent, a death knell for job creation. According to him, bitcoin has the potential to become a haven for interested investors. The antidote to repressive governments and excessive taxes is ….Bitcoin, Draper tweeted Thursday.