Here is an interesting write up that should make cryptocurrency advocates happy.
The Heritage Foundation, a leading policy think tank in Washington, DC, published a report at the end last year telling Congress and other public authorities they need to back off of Bitcoin and other alternative currencies or cryptocurrencies.
And why should they do that?
Well, it is all in the name of competition which is how effective markets work by streamlining competition not blocking it which is the current federal path when it comes to digital currency.
Policy experts David Burton, a Senior Fellow in Economic Policy, and Norbert Michel, PhD., Director of the Center for Data Analysis, of the Institute for Economic Freedom, explain that when it comes to money, competition is good, just like any other business or service.
As the two policy experts explain;
“Suppressing competition among competing currencies, if history is any guide, only deprives citizens of beneficial innovations in the means of payment.”
[clickToTweet tweet=”‘Suppressing competition among competing currencies, if history is any guide, only deprives citizens of beneficial innovations in the means of payment.’ #Bitcoin” quote=”‘Suppressing competition among competing currencies, if history is any guide, only deprives citizens of beneficial innovations in the means of payment.’ #Bitcoin”]
Burton and Michel continue to outline that when government has a monopoly on money, important information about the demand for money and whether there is an oversupply or undersupply of money is lost. While their comments may not please certain agencies in the federal government this is certainly food for thought.
And what are the anti-competitive impediments saddled upon cryptocurrencies? Taxes. Specifically;
- the capital gains tax
- the investment income tax
- Information reporting requirements
- back up withholding
One US state may agree with Burton’s and Michel’s assessment. Wyoming is moving forward with legislation that not only recognizes the existence of Utility Tokens, something the federal government has struggled to do, but elected officials in the state are moving forward with legislation that removes taxes on Bitcoin etc. transactions. You don’t tax the US dollar right? You don’t tax Euros, Pesos or Pounds. Why, on earth, would you tax Bitcoin, Ether, Litecoin or any other transaction focused digital currency?
[clickToTweet tweet=”You don’t tax Euros, Pesos or Pounds. Why, on earth, would you tax #Bitcoin, #Ether, #Litecoin or any other transaction focused digital currency? #Cryptocurrency” quote=”You don’t tax Euros, Pesos or Pounds. Why, on earth, would you tax #Bitcoin, #Ether, #Litecoin or any other transaction focused digital currency? #Cryptocurrency”]
Burton and Michel tells Congress it should avoid singling out alternative forms of money and let people use their preferred medium of exchange. The two policy experts believe fundamental tax reform is in order.
So what is next? Now it is up to Congress to act. There is a bill in Congress, HR 3708, that is designed to removed taxes on gross income from the sale or exchange of virtual currency but this rule is capped at just $600. For the crypto-rich, that means little. Congress can do more.
See the full report below.