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)