Bitcoiners know the frustration of tax season all too well. It’s never been easier to use Bitcoin as money. Yet, at the same time, the tax code puts an incredible burden on law-abiding citizens. Something as simple as buying a cup of coffee every day with Bitcoin can result in over 100 pages of tax filings.The System is BrokenThe System is Broken
Capital gains taxes present many problems. Yet, the process is almost tailor-made to discourage the use of alternative currencies.
First, capital gains tax rates are structured to incentivize long-term holding. This policy distorts the market by incentivizing buying and selling solely to mitigate tax losses. However, it’s especially distortionary in the context of money, given that long-term holding policies discourage what is generally considered “currency use.”
...read more at cato.org
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I despise this take. It makes it sound like the tax code is incompatible with using Bitcoin.
The tax code is incompatible with doing business and living a productive, peaceful life because it's immoral.
When someone works for BTC and holds it, that is already contributing to the "common good" in a much more efficient way than taxation would force on them. I don't feel like negotiating a compromise with the extortionists who organized the corona lockdowns. My side has more men, more guns, more money, God, the Founding Fathers, and the Executive Branch. If anything Newsom and Mamdani should be paying me.
Taxes that fund the collective infrastructure that makes business more secure and profitable are arguably legitimate.
Taxes that seek to obstruct the use of alternative MoE besides the state imposed fiat monopoly are not- they are actively obstructing a free market in MoE choices.
Your government and mine, are owned by sly, rentseeking, fiat debt slavery bankers.
Own it.
I think a reasonable case could be made for the 10% of the government's budget that is focused on preventing violent crime and blockading Iran. But the roads, healthcare, and education that you're thinking of are pure grift. No taxation is needed to build nice things. Private sector companies invent and build things all the time, and taxes consistently punish them and waste the profits on fraud.
The history of train construction in the US proves time and time again that collective infrastructure, if there is such a thing, is best handled by the private sector.
When you set out to build something for the sake of your own profit, you naturally make it as nice as possible, because otherwise you don't get paid. When you point a gun at someone productive to make them pay for someone with no financial incentive to build something no one asked for, out of some vague notion of charity, then you end up with trash.
We have a very different experience here in NZ where the neoliberal privatisation of formerly state owned strategic assets like rail, airline, power generation and distribution and community banking have had mostly very negative results for consumers and businesses as prices have gone up and service levels have gone down.
IMO it is a complex matter where the political will to operate such strategic often natural monopoly infrastructure is crucial to it being better than trusting ownership to profitr motivated private operators.
China is an example of how with the political will and determination it is possible to build an extremely competitive economy by utilising the efficiency and scale of state managed strategic assets.
With private ownership comes the many dangers of rentseeking market capture and corporate lobbyists capture of the political process.
The Big Oil war being fought across the global to cut off Chinas energy suppliers shows where this can end up- in genocide and war crimes!
Thank you for your attention to this matter!
Apparently not, because all of your friends are getting bombed, blockaded, and kidnapped while you issue strongly worded condemnations lol. The communist party is about to get conquered by a government less than half of a percent its size by landmass. Where will the argument for efficiency be then?
drop almost. use bitcoin anonymously.
Yes, but difficult for a business to do so.
Any business that asks their accountant 'should we accept Bitcoin' is very likely to get a firm response of 'No- the tax reporting implications are too negative'.
We need to face the harsh reality that our governments are largely owned-influenced by fiat bankers in an anti-competitive state imposed monopoly over our freedom of choice.
Yeah because their accountant sucks. The business who listens to me makes the most money.
The government is going to print fiat to oblivion so the capital gains tax is irrelevant.
What happens is that the businesses who get over the dumb herd mentality plaguing the financial industry significantly outperform the ones who don't, and the winners can afford to lobby the government to rewrite the tax code in their favor.
Tempted to agree with you CB although I still fear you under estimate the ferocity and determination of the Zionist fiat debt slavery bankers cartel who own most of our governments.
IMO we need to fight for the right to chose whatever MoE we wish to use and it to be taxed equally.
Which governments ban Bitcoin? Which parties support a progressive tax rate?
Using Bitcoin makes you richer. It's an inherently anti-socialist protocol.
The governments that claim free market principles and freedom of choice must obfuscate its anti competitive application of the monetary monopoly that is fiat money.
The autocracies around the world are less concerned with such obfuscation- they simply outright ban the use of Bitcoin as a MoE.
Our 'liberal democracies' instead use capital gains tax to obstruct Bitcoin MoE use.
They can claim they have not banned MoE use of Bitcoin, but they have made such use effectively impractical for any law abiding citizen.
Our 'democratic' governments are owned, behind the scenes, by sly fiat debt slavery bankers.
Here's something most folks don't realize about how we got into this mess. Back in 2014, the IRS had a genuine fork in the road. They could have classified Bitcoin as a "foreign currency" under IRC Section 988. That would've meant ordinary income treatment, simpler reporting, and no tracking of individual lot cost basis for every coffee purchase. Instead, Notice 2014-21 went with "property."
The reasoning in the IRS Chief Counsel's internal guidance was almost circular: Bitcoin can't be a currency because no sovereign government issues it. So the thing designed to work as money gets taxed like a stock portfolio. That single classification decision is why buying a $4 latte can technically generate a taxable event with a unique cost basis, holding period, and gain/loss calculation.
What really gets me is Congress has known about this for years. The Virtual Currency Tax Fairness Act, which would create a $200 de minimis exemption for small transactions, has been introduced in every Congressional session since 2017. It has bipartisan support every single time. And every single time, it dies in committee. Meanwhile the infrastructure bill's Section 6045 broker reporting rules actually expanded the reporting burden by pulling in DEXs and wallet providers.
The Cato piece nails the frustration, but the root cause isn't complexity for complexity's sake. It's that the IRS chose the one classification that makes money unusable as money, and Congress won't spend the political capital to fix a $200 exemption.