United States President Joe Biden has expressed his opposition to a debt ceiling agreement with Republican leaders that would allegedly benefit cryptocurrency traders. Reportedly, attending the Group of Seven (G7) summit, Biden class Republicans suggested the terms were “unacceptable” during a news conference.
“I will not agree to a deal that protects wealth tax cheats and cryptocurrency traders while jeopardizing food assistance for nearly 1 million Americans.”
The alleged protection of cryptocurrency traders refers to tax loss harvesting. according According to The Washington Post, there is an ongoing discussion between the White House and Republican leaders about blocking the mechanism for cryptocurrency transactions.
Crypto tax harvesting is a strategy that investors use to reduce their overall tax liability. It involves selling a cryptocurrency at a loss to offset the capital gains from the cryptocurrency profits. To claim a loss, the assets must be sold, and the proceeds must be used to purchase a similar asset within the 30 days before or after the sale. The mechanism is also available for stocks and other assets.
Related: US Debt Ceiling Crisis: Bullish or Bearish for Bitcoin?
Besides ending the cryptocurrency tax loss harvest, the White House has advised Republicans with a similar proposal that would prevent investors from deferring taxes on real estate swaps. Both changes will add about $40 billion in tax revenue for the US government.
A source told the newspaper that Republicans are rejecting the proposals. Speaker of the House Kevin McCarthy Claims Rising US debt is “a spending problem, not a revenue problem,” citing the Biden administration’s excessive spending during the pandemic. Meanwhile, the White House blames the debt issue on tax cuts from previous administrations, claiming that revenue has been greatly impacted by the tax cuts.
Republicans want to close the deficit with spending cuts of $4.8 trillion, which will directly affect the budgets of federal agencies. If Congress fails to raise the debt ceiling, the US could default on June 1st. Biden will reportedly speak with McCarthy on the phone during his flight from Hiroshima to Washington, D.C.
In effect since 1917, the debt ceiling is the limit set by Congress for the amount of money the federal government can borrow to pay the bills.
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