Opinion: The Senate's pursuit of cryptocurrency tax dodgers (via latimesopinion)
that enable people to store their cybercurrency or others with roles in the blockchain. And on Wednesday, Sens. Ron Wyden , Cynthia Lummis and Pat Toomey unveiled an amendment to clarify that the reporting requirement did not extend beyond “persons who conduct transactions on exchanges where consumers buy, sell and trade digital assets.”
That amendment, which Portman endorsed, seems to have quelled the controversy. But the episode raises a troubling question. Crypto investors were targeted not just because of the alleged tax avoidance, which the congressional Joint Tax Committee estimated at $28 billion over 10 years. More important, cracking down on crypto tax dodgers didn’t require a broad and costly investment in the IRS’ enforcement personnel and capabilities, unlike the bill’s original framework, which Senate Republicans could not abide.
But should lawmakers care about just this one type of tax dodging? Given that the problem is orders of magnitude larger than $28 billion over a decade, it seems almost arbitrary to focus on cryptocurrency trades — it’s like going after piggy banks instead of Wells Fargo. That’s not to say cryptocurrency investors shouldn’t be taxed the same way as investors in mutual funds and meme stocks. At least it’s possible now. But if cryptocurrencies ever become widely accepted as a form of payment, people won’t have to cash out their Bitcoins to buy goods. At that point, the IRS will truly be dependent on people disclosing their cryptocurrency capital gains to the taxman, who may have no other way of knowing about them. Good luck with that.
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