TL;DR:
- Biden’s policy on crypto taxation contradicts his environmental goals.
- Staking gains should not be treated as a taxable event.
- The IRS is planning to treat staking gains as immediate income, which is bad policy.
- Taxing staking gains is antithetical to generally accepted notions of good tax policy.
- The IRS’s policy on staking gains does Americans, and America, real damage, driving wealth creation and good jobs offshore.
- Taxing staking gains undermines the Biden administration’s top priority of onshoring jobs and reducing CO2 emissions.
President Biden’s stance on crypto taxation contradicts his environmental goals. Gains accrued by staking cryptocurrency should not be treated as a taxable event because it undermines a marquee environmental policy from the administration of United States President Joe Biden. The IRS appears inclined to treat staking gains as immediate income, and the penalties for getting sideways with the IRS can be draconian. Taxing, or threatening to tax, staking gains is bad policy and bad politics. It’s time for Congress to clarify the law and prohibit the taxing of unrealized gains if the IRS won’t administratively comply with the Biden administration’s clearly stated marquee policy.
There are many reasons not to treat staking gains as taxable events. The best reason is to put the IRS back in line with White House environmental policy to fight climate change. Taxing staking gains while they are in process is nonsensical and inconsistent with the treatment of other created assets. The IRS has staked out a real Alice in Wonderland policy on this one. Taxing staking gains does Americans, and America, real damage, driving wealth creation and good jobs offshore against stated presidential policy. The treatment of staking gains as a taxable event undermines the Biden administration’s stated top priority of onshoring jobs and reducing CO2 emissions.
In summary, the IRS’s policy on staking gains does Americans, and America, real damage, driving wealth creation and good jobs offshore. The treatment of staking gains as a taxable event is inconsistent with the administration’s environmental policy and generally accepted notions of good tax policy. If Biden and the IRS turn a deaf ear, Congress should take up the issue. It is necessary to clarify the law and prohibit the taxing of unrealized gains.
environmental goals, as argued by an opinion piece published on October 18, 2022 [495]. The article suggests that gains accrued by staking cryptocurrency should not be treated as a taxable event because it only makes sense to tax such gains upon their conversion to legal tender currency. The article argues that deferring gains until the sale only defers the receipt of taxes by the Treasury, and it does not cost the government any revenue.
The article suggests that taxing staking gains is bad policy and bad politics. It may drive wealth creation and good jobs offshore, against President Biden’s stated policy, and may even contribute to CO2 emissions, undermining the administration’s top priority of reducing emissions. The article states that the IRS should not treat staking gains in and of themselves as taxable events because it is antithetical to generally accepted notions of good tax policy.
The article compares crypto to other created assets such as artwork and houses. Jasper Johns is not taxed while turning a blank canvas into a multimillion-dollar artwork. He is only taxed when he is given the million-dollar check for his latest masterpiece. Similarly, a building contractor is not taxed while building a home, nor even when he turns it over to a realtor for sale. The IRS collects taxes upon sale. Taxing staking gains while they are in the process is nonsensical and inconsistent with the treatment of other created assets.
The article suggests that President Biden’s policy on crypto taxation undermines his environmental goals. The White House’s Office of Science and Technology fact sheet dated September 8, 2022, stated that “Switching to alternative crypto-asset technologies such as Proof of Stake could dramatically reduce overall power usage to less than 1% of today’s levels.” Taxing staking gains before they are realized will also cripple the movement to proof-of-stake.
President Biden’s stance on crypto taxation is controversial, as it undermines his administration’s environmental goals. The article argues that gains accrued by staking cryptocurrency should not be treated as a taxable event, as it may drive wealth creation and good jobs offshore, contribute to CO2 emissions, and is inconsistent with generally accepted notions of good tax policy. The article suggests that the IRS should not tax staking gains as a taxable event, and Congress should promptly fix this if the IRS does not comply with the administration’s policy.
