United States President Joe Biden’s Treasury secretary nominee Janet Yellen has once again become a topic of discussion in the Cryptoverse – this time over her comments suggesting she may look to tax of unrealized gains. And this has led some to question if the US is demonstrating a sign of what is to come in other countries that are printing fiat money at an unprecedented speed in an attempt to help economies.
Crypto advocates today said they were stunned by one of the many comments Yellen made during her hearing Tuesday before the Senate’s Finance Committee.
Per Reuters, the nominee “raised eyebrows of some senators and Wall Street when she said that Treasury would consider the possibility of taxing unrealized capital gains – through a “mark-to-market” mechanism – as well as other approaches to boost revenues.”
Unrealized capital gains are the increase in the value of assets that an investor is holding. These are then realized when that investor sells the asset at a higher price than they paid for it.
In 2019, the possibility of taxing wealthy investors on gains like these was also raised by Senator Ron Wyden, who will likely become chairman of the Senate Finance Committee, according to CNBC.
Appreciation would reportedly be taxed at the same rate as all other income – up to 37%.
However, none of the videos currently in circulation appear to show exactly what Yellen had to say on the subject.
But when asked about taxing realized appreciation of assets, she replied that she does “believe that capital gains should at some point be taxed,” and she does mention the mark to market approach (MTM). Frustratingly, though, the audio becomes unintelligible at this point.
The billionaire investor and co-founder of Oaktree Capital, Howard Marks, was quoted by CNBC as saying that Yellen’s plan to tax this type of gains is not practical, adding:
“I think that would hit sentiment. It would obviously make it less attractive to be an investor, all things being equal.”
The only way investors would be able to avoid that taxation is by not making any profit from their assets, Marks added.
Many commenters seem to be quite puzzled about the idea that Yellen would suggest taxing unrealized gains, with some wondering how that could even work.
As reported, Yellen has also suggested that there may be tax increases on wealthy Americans and corporations, but stressed that the focus now was firmly on providing relief to mitigate the ongoing COVID-19 pandemic.
The issues of further taxation and providing more aid would almost certainly involve Washington deciding to print more money. As reported, the need for more funding and stimulus measures announced last year prompted many to accuse Washington of ‘money printer go brrr’ tactics. Some believe that the combination of printing trillions of dollars and taxing unrealized gains would take a catastrophic toll on the economy.