All eyes are on bitcoin and the rest of the cryptocurrencies because they have had a great correction in price, BTC, ETH, DOGE among others, have lost between 9% and 15% of their value. And this has obviously made many feel disappointed and out of desperation they have liquidated about 260 billion dollars, thus awakening the bearish bear that had been asleep for almost a month.
The main reason behind this price horror story has been driven mainly by the US government's proposal to double the capital gains tax rate for wealthy investors, i.e. to apply a 43% tax on those earning $1 million or more per year. But the thing does not stop there, since this proposal of the tax on millionaire gains on cryptocurrencies is also included, since the IRS will be in charge of collecting taxes on cryptographic gains of 43% that exceed one million dollars or more per year.
This very high tax is to try to raise 4 billion dollars a year to fund projects and programs for the education and care of children, who to the pandemic and confinement, have been the most vulnerable, this plan is called "American Families Plan".
Jen Psaki, White House press secretary told the media that the main interest of this plan is to ensure that people pay what they owe, but what is more surprising is that this tax will go from 20% to 43%, but in cities like NY and California it could be even higher, since the accumulation of the flat taxes of those regions plus this new measure, the result could be a huge tax of 52% per year.
Now, taking calculations on this measure, implies that if you live in NY, and you earn 2.5 million dollars a year, you would have to give the state 1.3 million, and although these measures may seem suitable because the United States concentrates the largest number of wealthy people in the world, think about the capital flight and the breakdown of the economy, it will be abysmal.
And although this measure will also be applied to the profits of cryptocurrencies, it may be that while they are discussed and come into force, the market may continue to decline, but you will see that after 2 or 4 weeks after this earthquake of taxes has passed, the crypto market will recover quickly (We have many precedents) because when you cut one head two more take its place, and although they want to try to prevent people from investing in crypto to avoid capital flight and thus break the decentralized economy. The truth is that in the midst of so many technological advances there will always be a way to avoid this high tax rate, looking for a solution in cryptocurrencies, and again the market will recover.
Something in between hands?
What is most impressive about the constant efforts to destroy the crypto economy, is that maybe soon when they successfully launch the digital dollar (CBDC) they may apply lower interest rates if you have your money or earn your salary with the digital dollar. Since these are the same pressure measures applied by other governments, for example Nigeria and its prohibition to trade with cryptocurrencies in its territory.
In Nigeria, the government and the central bank banned cryptocurrency transactions and froze the accounts of the exchanges operating in the country, the truth is that this only contributed to make Nigeria the largest country per capita using cryptocurrencies in the world. And you know what? These pressure measures that they will impose in the United States against cryptocurrencies will only make them have even more momentum and greater success in a massive crypto adoption, and so history only repeats itself.
So, although at this time it may be difficult to maintain your crypto, believe me it will be the best. Because when all this happens and the market recovers you will have the satisfaction of having great rewards, so I want to recommend you to read this article that I have found very interesting:
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