Speaking at the final day of the G7 summit in Japan, U.S. President Joe Biden said he would not support a bipartisan debt ceiling deal with Republicans that protects wealthy tax cheats and crypto traders.
Biden's statement came amid the ongoing discussions between the White House and the Republican leaders about banning tax-loss harvesting in crypto transactions.
- Tax-loss harvesting is a strategy in which the investors sell an asset at a loss and repurchase it instantly to diminish the profit on the purchase, reducing the overall tax liability while holding the asset in the portfolio.
- Biden implied that a potential deal allows for this mechanism by protecting crypto traders while putting food assistance at risk for nearly 1 million Americans.
- The President also recently shared an infographic on Twitter, calling to remove tax loopholes that only help wealthy crypto investors.
- Biden's fiscal 2024 budget proposal, revealed in March, similarly suggested doubling the capital gains tax rate and banning crypto wash sales in which a crypto trader sells assets at a loss and repurchases them immediately for tax purposes.
- Also, the White House plans to impose a 30% federal tax for electricity usage from all digital asset mining.
- On the other hand, the U.S. currently faces a potential debt ceiling.
- If the Democrats and Republicans cannot agree upon a new debt ceiling deal, the U.S. can run out of cash by June 1, defaulting on debt.
- The debt ceiling refers to the maximum amount of money the U.S. government is authorized to borrow as federal debt to meet its legal obligations, including payments for military salaries, tax refunds, and Social Security and Medicare benefits.
- President Biden recently warned that the whole world would run into trouble if the U.S. hits the debt ceiling.