For most investors in crypto currency, they likely never thought they would be worrying about the Capital Gains Tax for a few years, if not a few decades.
But when discussing crypto trading, from BitCoin, Ethereum, Doge Coin or other coins like VeChain, tax rates are a common question on Reddit among traders.
So when President Joe Biden hinted at nearly doubling the Capital Gains Tax, young crypto traders freaked, sold out and $200 billion was wiped out of the market.
Bitcoin dropped to $47,509 from its recent high of $64,800 on April 13th.
Investors in the joke coin Doge that’s pushed by Elon Musk saw their coin drop from a recent high of $.45 per coin to $.15 per.
But like all things crypto, the swings don’t last long and the digital currency has recovered slightly since the rapid, early morning drops.
But Biden’s taxes will likely still be on track regardless.
Currently, long-term gains for assets held over a year are taxed at zero, 15 percent and 20 percent for people earning more than $441,450.
Biden wants to tack on a new tier of 39.6% for those earning more than a million.
Biden’s plan will likely drive crypto traders to use overseas exchanges to hold their investment away from the greedy eyes of the feds.
But for the young traders spooked by Biden’s proposal, they likely don’t realize that short term gains are currently taxed as normal income and fall under standard income tax brackets.
The trading platform Gemini reported this week that 63% of American adults are invested in crypto currency. The majority of investors are women with the average age being 38 and the average income holding at $110,000 a year.