United States President Joe Biden has voiced his opposition to a proposed debt ceiling agreement that allegedly benefits crypto traders. The disagreement arose during the Group of Seven (G7) Summit, where Biden referred to the terms put forth by Republican leaders as “unacceptable” in a press conference.
“I refuse to support a deal that prioritizes the protection of wealthy tax evaders and crypto traders while jeopardizing essential food assistance for nearly 1 million Americans,” Biden stated.
The measures in question primarily revolve around tax-loss harvesting, a strategy used by investors to lower their overall tax obligations. The ongoing discussions between the White House and Republican leaders involve potential restrictions on this mechanism for cryptocurrency transactions, as reported by the Washington Post.
Tax-loss harvesting entails selling a cryptocurrency at a loss to offset capital gains from other crypto profits. To claim a loss, the sold assets must be used to purchase a similar asset within a specified timeframe. This mechanism also applies to stocks and other assets.
In addition to targeting tax-loss harvesting in the crypto space, the White House has proposed a similar limitation on tax deferrals for real estate swaps. Both these changes combined are estimated to generate around $40 billion in tax revenue for the U.S. government.
The Republican camp has rejected these proposals, according to sources cited by the Washington Post. House Speaker Kevin McCarthy argues that the nation’s debt is a result of excessive spending by the Biden administration during the pandemic, asserting that it is a “spending problem” rather than a revenue issue. Conversely, the White House attributes the debt problem to tax cuts implemented by previous administrations, claiming that revenue has been significantly impacted by these reductions.
Republicans are aiming to address the deficit through $4.8 trillion in spending cuts, which would directly impact federal agencies’ budgets. If Congress fails to raise the debt ceiling, the United States could face the risk of default as early as June 1. Biden is reportedly scheduled to speak with McCarthy over the phone during his flight from Hiroshima to Washington, D.C.
The debt ceiling, which has been in effect since 1917, represents the maximum amount of money that the federal government can borrow to cover its expenses as determined by Congress.
