Taxation Without Representation

How Crypto Taxes Work

  • If you bought and sold crypto, it’s a taxable event.
  • If you traded crypto, it’s a taxable event.
  • If you bought and sold NFTs, it’s a taxable event.
  • If you traded NFTs, it’s a taxable event.
  • If you made a DeFi loan, earned “interest” in the form of protocol tokens like cETH, then swapped those back into ETH, it’s likely a taxable event. (The IRS is still figuring out how to tax this one.)

This is How Governments Smother Money

Imposing a tax on unwanted forms of money is the easiest way for governments to smother them.

Rule of thumb: For every crypto profit, take out 30% for taxes, and $50 in Ethereum fees. (Letting your wealth grow is free.)

Crypto Taxes: The Way Forward

  • Limit and standardize tax obligations. To encourage digital e-commerce, we have to treat cryptocurrencies as currencies: we shouldn’t be taxed twice for using crypto to buy coffee.
  • Promote blockchain innovation through tax credits. For example, our Make America Green Again idea would encourage bitcoin miners to build out our solar infrastructure by giving them tax credits for mining with 100% renewable energy.
  • Accept crypto to pay taxes. Here’s a twist: allow citizens to use crypto to pay taxes, as well as other government services (drivers’ licenses, registrations, etc.).
  • Today’s crypto tax laws are like the Stamp Act of 1765: they restrict the free flow of information (i.e., digital value), as well as being “taxation without representation.”
  • The lessons of “wildcat banks” in the 1800s is that a strong national bank can co-exist with healthy regional banks, but smart legislation is needed (like the National Bank Acts).
  • The frameworks for this legislation already exist (see the Legislator’s Toolkit), and we can expect these to really take root in 2023, as more crypto millionaires begin donating to politicians.

Evolution, Not Revolution

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