US President Joe Biden has voiced his opposition to a debt ceiling deal with Republican leaders that would supposedly benefit cryptocurrency traders. By attending the Group of Seven (G7) Summit, Biden reportedly classified The terms proposed by the Republicans as "unacceptable" during a press conference.
"I will not accept a deal that protects estate tax scammers and cryptocurrency traders while putting food assistance for nearly 1 million Americans at risk."
The alleged protections for cryptocurrency traders refer to the collection of tax losses. According To the Washington Post, there is an ongoing discussion between the White House and Republican leaders about blocking the mechanism for cryptocurrency transactions.
Crypto Tax Loss Harvest is a strategy investors use to reduce their overall tax liability. It involves selling a cryptocurrency at a loss to offset capital gains from crypto gains. To claim a loss, the assets must be sold and the proceeds must be used to purchase a similar asset within 30 days before or after the sale. The mechanism is also available for shares and other assets.
Related: US Debt Ceiling Crisis: Bullish or Bearish for Bitcoin?
In addition to ending tax loss collection for cryptocurrencies, the White House presented Republicans with a similar proposal that prohibits investors from deferring taxes on real estate exchanges. Both changes would add about $40 billion in tax revenue for the US government.
Republicans reject the proposals, a source told the Post. House Speaker Kevin McCarthy claims America's rising debt is a "spending issue, not a revenue issue," citing the Biden administration's excessive spending during the pandemic. Meanwhile, the White House blames the debt problem on tax cuts from previous administrations, claiming that revenues have taken a significant hit from the tax cuts.
Republicans want to close the deficit with $4.8 trillion in spending cuts, which would directly affect the budgets of federal agencies. If Congress fails to raise the debt ceiling, the US could default on June 1. Biden will reportedly speak to McCarthy on the phone during his flight from Hiroshima to Washington, D.C.
In force since 1917, the debt ceiling is the limit that Congress has set on the amount of money the federal government can borrow to pay bills.
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