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Cryptocurrency transfers of more than $ 10,000 will have to be reported to U.S. tax authorities according to new proposals from the Biden administration, amid a tightening of the digital currency regulatory environment.
The U.S. proposal, unveiled a day after China noted a regulatory crackdown on digital currencies, is part of a broad set of proposals aimed at curbing tax evasion.
The price of bitcoin, the most actively traded cryptocurrency, fell 5% after the US announced its proposal.
He followed chaotic few hours of the bitcoin trade on Wednesday, when China’s central bank warned financial institutions to accept cryptocurrencies as payment or to offer related services and products. The price of bitcoin fell to 30% after the comments before finally recovering.
The U.S. Treasury said the cryptocurrency posed a “major detection problem in facilitating illegal activity in general, including tax evasion,” echoing comments from the European Central Bank this week, which said the “potential use of cryptocurrencies for illicit purposes” was a cause for concern.
The U.S. proposal is part of a Treasury report showing how Joe Biden’s White House plans to close the so-called “fiscal gap” by strengthening the Internal Revenue Service. The report is the latest in a series of White House proposals that would lead to wealthier Americans paying more taxes.
The Biden administration intends to close the tax gap (the difference between taxes owed to the U.S. government and those actually paid) by investing about $ 80 billion in the IRS and expanding the capacity of the IRS. income service to identify wealthy people who avoid paying taxes due.
The proposals include new disclosure requirements for financial institutions, which should share information with the IRS about the total amounts coming in and out of bank accounts, in addition to existing reports.
According to the Treasury, the global “fiscal gap” was $ 600 billion last year and is projected to increase to about $ 7 billion over the next decade if left untreated. The Treasury said approximately 99% of taxes due on wages were paid each year, but it was estimated that compliance with “less visible” sources of income was more likely to be associated with higher incomes (such as now the property or rental income) lower.
Treasury estimates suggest that the IRS’s proposed review will raise $ 700 billion in additional tax revenue over the next 10 years and $ 1.6 billion over the next decade.
Under the president’s proposals, the Treasury said audit rates would not increase for people earning less than $ 400,000 a year.
The proposals are part of Biden $ 1.8 million American family plan, an ambitious legislative package that, if passed in Congress and signed into law, would introduce a major expansion of federal funding for child care, higher education, and family and medical leave in the U.S.
The White House has proposed paying the plan, in part, with about $ 1.5 million in tax increases for wealthy Americans, including nearly double the rates of capital gains for people who earn more. of a million dollars. He proposed tax hikes have caused a opposite reaction among some critics on Wall Street and the American corporation.
Plans to curb tax evasion may be more politically pleasing for Washington lawmakers, especially for Republicans who have raised red flags over any reversal of Donald Trump’s 2017 tax cuts.
The U.S. Household Plan, established by the White House last month, is the third component of Biden’s powerful economic agenda, after the $ 1.9 million fiscal stimulus bill, which was signed into law in March and $ 2.3 million. infrastructure proposals which are debated on Capitol Hill.
Republicans have largely rejected the president’s proposals, accusing Democrats of unnecessary spending that risks raising inflation. Republican senators have offered a $ 600 billion counter-proposal to the president’s infrastructure package, though Republican lawmakers have suggested in recent days that they are open to a package priced closer to 800,000 and $ 900 billion.
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