Joe Biden’s 25% Taxation on Rich May End Up Hurting Crypto Investors 

YEREVAN (CoinChapter.com) — US President Joe Biden has another controversial law up his sleeve. In the latest move that has caused much political stir, he has proposed to scrap tax subsidies for various industries in the country.

According to reports, cryptocurrency firms, private equity fund managers, real estate firms, and oil companies will be hit. 

The new budget is seen to be in sync with the Biden Administration’s plans to discontinue a series of lucrative tax breaks for big corporations. The detailed text of the budget proposal is expected on March 9, 2023.

“The budget cuts wasteful spending on Big Pharma, Big Oil and other special interests, cracks down on systemic fraud and identity theft, and makes programs more efficient and cost-effective — saving taxpayers hundreds of billions of dollars,”

 Bloomberg reported citing a summary of the document.

Joe Biden doesn’t have many friends in the US Congress

The proposal, which may earn Joe Biden much-needed favor among US citizens, is unlikely to pass. The Republican Party controls the House of Representatives. The Kevin McCarthy-led Congress will block any attempt to scrap tax benefits to major corporations.

With the 2024 Presidential elections knocking, Joe Biden wants to come out as someone who is not afraid to alienate big firms to protect the interests of the US citizens. 

One area he has always been critical of is the oil and gas industry. Biden had repeatedly criticized Big Oil for reaping massive profits when the world was reeling under an energy crisis. In addition, the Russian invasion of Ukraine has caused consumer energy costs to skyrocket, with big oil firms getting all the benefits at the cost of common citizens.

In February 2023, the US President slammed big oil firms. In his State of the Union speech, he called their conduct “outrageous.” 

“You may have noticed that Big Oil just reported record profits. Last year, they made $200 billion in the midst of a global energy crisis. I think it’s outrageous,”

 Biden said.

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Can the Biden Administration cut oil tax rebates? 

Tax subsidies to large oil companies have constantly been debated in the United States.

Several eco-activists and taxpayer advocacy groups have slammed the special privilege the industry faces. Some argue it goes against the nation’s policy of pursuing much greener energy sources. Others argue that the large amounts of profits they generate do not warrant such privileged treatment. 

However, the industry has warned that without the tax concessions, it will be unable to meet the growing demand for oil and gas. 

While the exact figure for rebates is hard to identify, experts believe it could be between $10 billion and $50 billion. With the industry enjoying several tax breaks, their elimination could add billions to the Treasury Department’s costs. 

But can Joe Biden succeed in going against the rich lobby of big oil, especially without many friends in Congress? It is unlikely.

What does this mean for the crypto industry? 

As expected, the Biden Administration’s new budget proposal has not ignored the growing crypto industry.

Under current laws, investors are allowed to obtain tax rebates if they sell their investments for a loss. They can immediately re-purchase these cryptocurrencies without incurring any penalties. In the case of stocks and bonds, this phenomenon is called wash trading. 

However, the US Government wants to end this practice. As per estimates, the measure will raise $24 billion for the Government. 

In addition, the Biden Administration will discontinue the carried-interest tax break for private equity managers and venture capitalists. Other discontinuation of tax breaks for real estate investors will also help generate funds for the treasury. According to current regulations, investors can avoid paying taxes on all profits reinvested in new properties. 

Should the law pass, many giants must re-evaluate their business practices. The Biden Administration is bound to face a massive backlash from them.