President Joe Biden Proposes Highest Tax Rate in History

The proposal was added to Biden’s fiscal year 2025 budget, Forbes reports. Under the proposal, the top regular tax rate would increase to 39.6%, and the net investment income tax rate would increase by 1.2 percentage points above $400,000. Combined, these would bring the top marginal rate on long-term capital gains and qualified dividends to 44.6%.

The main proposal involves increasing the long-term capital gains and qualified dividend rate to 37% for taxpayers with income above $1 million. However, to reach the 44.6% rate, another proposal to increase capital gains tax is needed from the government.

Likewise, the rate will only apply to those with taxable income of $1 million and investment income of $400,000. Introducing such a proposal is a wise policy measure, creating higher tax rates while ensuring income thresholds. This policy seems to be trying to create income equality between people with normal income and income from investments.

Economic crisis could push investors into cryptocurrencies

In a situation where the government is pushing for tax increases, many businesses and individuals may turn to digital assets to experience economic freedom. At the very least, tax reporting on cryptocurrencies is not yet fully effective and does not require tax rates as high as what Biden proposes.

Related: US Sentences Binance Founder CZ to 36 Months in Prison

The United States Internal Revenue Service (IRS) revealed an initial draft of a new tax form for reporting cryptocurrency transactions a few days ago. The form, called 1099-DA, is intended to help simplify tax obligations related to cryptocurrency transactions. It records taxable gains or losses and includes sections that refer to specific tokens, wallet addresses, and other transaction information.

Many investors may find filling out this form easier, as several tax experts have explained the proper approach to doing so.