With the tax cuts that it passed not so long ago, the Trump administration cemented the fact that it is sympathetic of the wealthy within the U.S.
Therefore, it did not come as a surprise when the newly appointed U.S. Financial Czar, Larry Kudlow, mentioned to CNBC that he would be considering lowering capital gains taxes through his new position.
Capital gains tax and cryptocurrencies
While the capital gains taxes would not have affected the cryptocurrency community until a few years ago, they are very relevant to U.S. citizens and their cryptocurrency holdings in the current climate.
Any cryptocurrency holder within the U.S., when parting ways with their precious coins through a trade or a transaction, needs to make sure that the value is recorded and reported to the Internal Revenue Service (IRS), so that the digital asset which is currently filed as “property” under the country’s tax laws, can be subject to capital gains tax proceedings.
With lower capital tax gains, cryptocurrency traders could benefit from tax cuts that would leave their pockets heavier as compared to when they let go of their cryptocurrencies at present.
The capital gains taxes are levied at profits made from the asset. If the asset had been held for more than a year, then the taxes are levied at the same rate as the holder’s ordinary income. However, if the assets are older, then their profits subject to a different rate of capital gains tax.
However, while Kudlow has specifically stated that capital gains taxes could be lowered, given his history with predictions, the news should only be taken seriously once such a bill has actually passed.