Speculators in Bitcoin have suffered heavy losses after reports that Joe Biden plans to raise taxes on the wealthiest Americans to address inequality and fund trillions of dollars in higher social spending.
The price of the cryptocurrency fell more than 6% to less than $ 50,000 (£ 36,000) per bitcoin, reaching the lowest level since the beginning of March, as the White House puts the final touches on plans to almost double the rate of the capital gains tax for wealthy people.
For those making $ 1 million or more, the investment income tax would increase to 39.6%, up from the current rate of 20%, as part of plans expected to be announced next week. A 3.8% tax on investment income used to fund Obamacare would also be maintained, meaning the new top rate would reach 43.4%.
Biden is also preparing to raise the top marginal income tax rate to 39.6% from 37%, according to reports from the New York Times and Bloomberg News, to bring the levy on investment earnings in line with the income taxes.
The UK government was urged to align investment taxes with the rates applied to income by the Tax Simplification Office last year.
The Biden administration is planning a radical overhaul of the American tax system designed to make wealthier individuals and large companies pay more in taxes, addressing inequality and helping to pay the bill for the president’s economic agenda.
Wall Street stocks, tech company stocks, and digital assets like Bitcoin pulled out after reports late Thursday. The S&P 500 closed 0.9% lower, while the FTSE 100 and European markets were lower on Friday morning.
Bitcoin had risen to a record $ 64,895 on April 14, the day of the Throwing of Coinbase, the largest cryptocurrency exchange in the US, on Wall Street’s high-tech Nasdaq Stock Exchange. The rise of digital currency also comes as emergency stimulus from the US Federal Reserve and government support schemes during the Covid-19 pandemic helped inflate financial markets.
Analysts said the higher rates could lead wealthy individuals to sell stocks to lock in current rates, while private equity investors and hedge funds would also be hit.
Joshua Mahony, a senior market analyst at financial trading platform IG, said: “As traders reacted with glee to repeated bouts of stimulus last year, traders are gradually seeing the uncomfortable truth that those debts must be paid off. one way or another. other.”
Biden will need the full support of his party to pass the fiscal plans in Congress, and the president will require the unanimous backing of Democrats against Republican resistance.
“This could lead to a situation where the tax increase implemented is lower than what is currently being proposed in an effort to engage with other legislators,” said Walid Koudmani, market analyst at financial trading platform XTB.
When asked about Biden’s plan and the impact on investors, White House press secretary Jen Psaki said: corporations and businesses that can afford it. And his point of view and the point of view of our economic team is that this will not have a negative impact ”.
George is Digismak’s reported cum editor with 13 years of experience in Journalism