Tag: graduated income tax

Capital Gains is Hurting Cryptocurrency

By Addie Mae Villas | United States

With few exceptions, most libertarians can agree that taxes are theft. The government taxes our money, for their own interests, and do so under threat of punishment. Although we should abolish nearly all taxes, the capital gains tax (CGT) is one of the worst. The government penalizes an investor for making money, drawing off of their rewards. One area that is being hurt the most from the CGT is cryptocurrency users, as the IRS is trying to enforce the tax on their gains, sacrificing the privacy of crypto users.

Before the GOP created their recent tax laws, Bitcoin users could simply transfer their coin to other cryptocurrencies and state that there was no gain. But now, the tax bill states that the exchange of cryptocurrencies is simply a property exchange. This makes all crypto exchanges eligible for taxation. With the new classification, government is able to tax cryptocurrencies anytime someone uses or exchanges it.

With the IRS cracking down on crypto users, users can forget about privacy. We can simply look to when the IRS requested that Coinbase send all the records of users from 2013-2015. In April, the IRS expects all crypto users to report their gains on their tax returns. However, this is an unreasonable request, as crypto users will have to forgo their anonymity with the market. This leads into the fact that 36% of investors plan to commit tax fraud. With the risk of losing privacy on the line, many expected this statistic to further rise.

The new classification of cryptocurrencies is just another way the government is trying to control the markets and an individual’s right to privacy. Cryptocurrencies have proven to be the future, as they are far more effective than our current currency. Ron Paul has stated time and time that we need to end the Federal Reserve to advance liberty. In its absense, cryptocurrencies provide a path forward for economic development. Seeing that cryptocurrencies are direct competition to a government-run bank, it’s no surprise that is under attack.

The funny thing about the government enforcing the CGT is that they are haltering investment, which hinders innovation, which in the end only harms the economy. Since we have the CGT in place, investments are more expensive, causing fewer people to invest. The OECD reported that innovation comes from investment, and the growth of an economy is reliant on innovation. The removed competition is inherently harming the economy.

The capital gains tax is just another tax government uses to assert unjust power over the people. The crackdown on crypto users is not only harming the crypto market but also removing the values of privacy from all the users. The CGT puts a consequence on being successful, and only adds onto a very high income tax for most taxpayers.The capital gains tax needs to be abolished to protect the crypto market and encourage investments for capital gain.

(Image from wccftech.com)


Graduated Income Taxes Under the 16th Amendment: Tyrannical or Totally OK?

By Jadon Buzzard | USA

I’ve had many fond memories of going out to eat as a child. The “fry tax” was just one of them. The idea was that, since my parents were paying to take me out to eat, they could help themselves to a portion of my fries, justifying the infamous fry tax. Thus, from a young age, I was exposed to the wonderful world of taxes. However, many misunderstandings arise about the correct method to tax the citizens. The 16th Amendment, which allows the government to impose taxes on incomes, is one such part of our Constitution. Many believe that this Amendment justifies the adoption of a graduated income tax, where the percentage of the tax increases as income levels rise. However, a graduated income tax conflicts with both the spirit and the letter of the US Constitution and cannot be justified by the 16th Amendment. To prove this, we will examine the spirit of the Constitution regarding taxes, then we will observe how the actual text of the Constitution does not even justify such a tax. Finally, we will show that a proper understanding of the 16th Amendment is necessary to our economic freedom.

First, a graduated tax on incomes directly conflicts with the spirit of the US Constitution. The founders of our country believed in a just tax system, one that did not split the nation into factions. As Alexander Hamilton famously wrote: “We are attempting, by this Constitution, to abolish factions, and to unite all parties for the general welfare.” A country that promotes peace and unity rather than parties and factions was obviously the end goal of our Constitution. However, a graduated income tax does not promote unity. It disadvantages those who earn more by mandating that they not only pay a higher amount, but also a higher tax percentage. It herds the richer and the poorer into big classes and urges each class to advocate for a separate policy or idea, splitting our nation apart. Graduated income taxes certainly do not align with the spirit of the Constitution, and therefore should not be justified by the 16th Amendment.

Moreover, a graduated income tax fails to align with the letter, or actual text, of the Constitution. The 16th Amendment doesn’t specifically allow the government to increase the tax percentage as the level of income rises. In fact, the Amendment simply says that Congress may collect income tax without apportionment or census among the states. Yet, many politicians base their justification for a graduated tax on this Amendment, even though no provision really grants that power to Congress. A graduated income tax also conflicts with the ideas of other portions of the Constitution, such as the beginning of Article 1, section 8. This section states that all duties, imposts, and exercises must be uniform throughout the United States, but a graduated income tax is not uniform because the tax rates fluctuate. Therefore, the 16th Amendment cannot legalize this kind of tax.

Lastly, we must have a proper understanding of the true intent behind the 16th Amendment if we are to preserve our economic freedom. Before the 16th Amendment was ratified, any kind income tax was technically Unconstitutional, and the government levied duties on imports to compensate. When citizens realize that income taxes were necessary to stop the import tariffs, they drafted an Amendment that would allow such a policy. However, as we’ve already seen, a graduated income tax is not in line with the Constitution. A better kind of tax that would follow our Constitutional principles more stringently would be a flat tax, a tax with a set rate throughout the nation. This is most likely the kind of tax that the 16th Amendment does justify. If citizens don’t understand the real power that Congress holds over taxation, then economic freedom has a bleak future in America. But holding to a more stringent view of the 16th Amendment and keeping Congress in check will allow us to preserve our liberty.

Just like the “fry tax” in my family took away my precious French fries, federal taxes take money from the citizens and must be properly justified to be legitimate. The concept of a graduated income tax conflicts with the ideas that our founders had, and it is a power that simply isn’t granted in the 16th Amendment or elsewhere in the US Constitution. Rather than simply taking lawmaker’s words for it, if our Constitution does not justify a certain kind of tax, then we as citizens, should take a stand to oppose it as well. By striving to uphold just taxes, citizens can ensure that America will have a prosperous and free future.