United States President Joe Biden’s Treasury secretary nominee Janet Yellen has once again become a topic of discussion in the Cryptoverse – this time over her comments suggesting she may look to tax of unrealized gains. And this has led some to question if the US is demonstrating a sign of what is to come in other countries that are printing fiat money at an unprecedented speed in an attempt to help economies.
Crypto advocates today said they were stunned by one of the many comments Yellen made during her hearing Tuesday before the Senate’s Finance Committee.
Per Reuters, the nominee “raised eyebrows of some senators and Wall Street when she said that Treasury would consider the possibility of taxing unrealized capital gains – through a “mark-to-market” mechanism – as well as other approaches to boost revenues.”
Unrealized capital gains are the increase in the value of assets that an investor is holding. These are then realized when that investor sells the asset at a higher price than they paid for it.
In 2019, the possibility of taxing wealthy investors on gains like these was also raised by Senator Ron Wyden, who will likely become chairman of the Senate Finance Committee, according to CNBC.
Appreciation would reportedly be taxed at the same rate as all other income – up to 37%.
However, none of the videos currently in circulation appear to show exactly what Yellen had to say on the subject.
But when asked about taxing realized appreciation of assets, she replied that she does “believe that capital gains should at some point be taxed,” and she does mention the mark to market approach (MTM). Frustratingly, though, the audio becomes unintelligible at this point.
The billionaire investor and co-founder of Oaktree Capital, Howard Marks, was quoted by CNBC as saying that Yellen’s plan to tax this type of gains is not practical, adding:
Maybe if the banks give Janet a few more high-paid speeches at random dinners she’ll reconsider
— Jack McGuire (@JackMacCFB) January 21, 2021
As reported, Yellen has also suggested that there may be tax increases on wealthy Americans and corporations, but stressed that the focus now was firmly on providing relief to mitigate the ongoing COVID-19 pandemic.
The issues of further taxation and providing more aid would almost certainly involve Washington deciding to print more money. As reported, the need for more funding and stimulus measures announced last year prompted many to accuse Washington of ‘money printer go brrr’ tactics. Some believe that the combination of printing trillions of dollars and taxing unrealized gains would take a catastrophic toll on the economy.
Let’s have a moment of silence for Argentine #Bitcoin HODLers who now have a 5.25% wealth tax on 200m+ pesos ($2.5m).
If #Bitcoin is sold to get pesos to pay then a 5-35% capital gains tax. And @chainalysis will be very helpful informing what is owed. https://t.co/rqbBIVkV1h
— Bitcoin (@Bitcoin) January 21, 2021
The US has printed trillions already, but “is hardly the only country throwing money at the coronavirus recession,” argued Steven Pressman, a professor of Economics at Colorado State University.
He wrote that traditionally economists have argued that “higher spending today means taxes will have to go up to pay for it” – an outcome that can be delayed for a time by borrowing money from investors.
But increased borrowing can lead to rising interest rates, which would then raise costs for consumers and businesses, hurting economic growth, he added.
Meanwhile, new US President Joe Biden nominated Gary Gensler to run the Securities and Exchange Commission (SEC) and Rohit Chopra to direct the Consumer Financial Protection Bureau.
The move signals Biden’s “intent to aggressively regulate the financial services industry,” reported MarketWatch, citing experts.
As for Gensler, who has now been officially named the SEC Chair, Howard Elisofon, a former SEC lawyer and the co-chair of the securities litigation and enforcement group at Herrick was quoted as saying,
“I think he’s going to be a very aggressive regulator, and in these difficult times that’s what the securities markets need.”
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