The President of the United States, Joe Biden, has expressed opposition to a debt ceiling agreement with Republican leaders that is supposed to benefit crypto traders. Attending the Group of Seven (G7) Summit, Biden reportedly classified the Republicans’ proposed terms as “unacceptable” in a press conference.
“I will not agree to a deal that protects wealth tax cheats and crypto traders while putting food aid for nearly 1 million Americans at risk.”
The alleged protections for crypto traders aim to harvest tax losses. According to the Washington Post, there is an ongoing discussion between the White House and Republican leaders about blocking the mechanism of cryptocurrency transactions.
Crypto tax loss harvesting is a strategy used by investors to reduce their overall tax liabilities. This involves selling a cryptocurrency at a loss to recoup the capital gains from crypto profits. To claim a loss, the property must be sold, and the proceeds must be used to purchase a similar property within 30 days before or after the sale. The mechanism is also applicable for stocks and other assets.
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With the end of tax loss harvesting for crypto, the White House put to Republicans a similar proposal that prohibits investors from deferring taxes on real estate swaps. Both changes would add about $40 billion in tax revenue for the US government.
Republicans rejected the proposals, a source told the Post. House Speaker Kevin McCarthy admitted that the rising US debt is a “spending problem, not a revenue problem,” citing the Biden administration’s overspending during the pandemic. Meanwhile, the White House blamed the debt issue on tax cuts from previous administrations, claiming that incomes were greatly affected by the tax cuts.
Republicans want to end the deficit with $4.8 trillion in spending cuts, which will directly affect the budgets of federal agencies. If Congress fails to raise the debt ceiling, the US could default on June 1. Biden will reportedly speak with McCarthy on the phone during his flight from Hiroshima to Washington, DC
In effect since 1917, the debt ceiling is the limit set by Congress on how much money the federal government can borrow to pay its bills.
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