Biden’s proposal for a 44.6% capital gains tax expected to lack substantial impact

President Joe Biden’s plan to raise the capital gains tax rate to 44.6% for certain individuals, which would be the highest rate in U.S. history, is unlikely to have a significant impact on the average crypto investor, according to Matthew Walrath, the founder of CryptoTaxMadeEasy. Even if these tax proposals are passed into law, they are unlikely to affect most people in the crypto industry. The proposed tax rate, along with the suggestion of a 25% tax on unrealized gains, has generated a lot of attention on social media, despite being public knowledge for over a month. The 44.6% rate was introduced in a document from the Department of Treasury on March 11, which stated that it would only come into effect if two separate proposals to increase the top ordinary tax rate and the investment income tax rate were approved. Walrath explained that the proposal aims to raise the long-term capital gains tax rate for individuals earning over $1 million a year to 44.6%. SqueezeTaxes, a pseudonymous crypto accountant, supported Walrath’s view and described the backlash against the proposal as another attention-grabbing headline. SqueezeTaxes explained that the proposals target high-income earners, starting from $400,000 or more on one end and $1 million or more on the other. The average crypto investor globally earns around $25,000 per year, according to data from TripleA, a crypto payment firm. However, this figure includes data from countries with lower average incomes than the United States. Additionally, Biden’s Federal Budget proposal includes a 25% tax on unrealized gains for individuals with more than $100 million in net assets. This proposal has been criticized as potentially harmful to the economy. However, Walrath pointed out that this tax would only affect ultra-high-net-worth individuals and would not impact the majority of people in the crypto industry. He suggested that Biden’s tax proposals may be a political strategy to appeal to lower-income voters.