Ohio Rep Says Deal To Avoid Default Nixes Proposed Crypto Tax

Table of Contents

• US Looks To Avoid Default 
• 30% Crypto Tax Blocked? 
• Crypto’s Growing Appeal 
• The Digital Asset Mining Energy Excise Tax

Republican congressman Warren Davidson has stated that a tentative deal aimed at stopping the US government from defaulting on its debts potentially scuppers a proposed 30% crypto mining tax. 

US Looks To Avoid Default 

United States lawmakers had, on the 28th of May, 2023, released a draft of the “Fiscal Responsibility Act of 2023” bill. The bill allows the government to increase the debt ceiling following long negotiations between President Joe Biden and House Speaker Kevin McCarthy. The debt ceiling is a limit on how much debt can be incurred by the Treasury Department. The proposed legislation still requires congressional approval before it can take effect and help the United States of America avoid a national default. A national default would be nothing short of an economic catastrophe for the US government. 

The proposed bill would suspend the debt ceiling for two years, allowing the US government to continue to borrow money and settle its outstanding debts. President Joe Biden had pressed for the deal to include several tax increases for corporations and high-income individuals. However, the draft suggests that such taxes were highly unlikely to be implemented. 

30% Crypto Tax Blocked? 

Congressman Davidson took to Twitter to discuss the proposed bill and, in a relief to the crypto ecosystem in the US, stated that it blocked several proposed taxes. This included the proposed 30% tax on electricity used by cryptocurrency miners, which many feared would be part of President Biden’s FY2024 budget. If the proposed crypto tax passes, cryptocurrency miners could potentially face a 10% tax increase each year for the next three years starting in 2024. In a discussion on Twitter, Congressman Davidson called the blocking of proposed taxes a small victory. 

Following the negotiations, President Biden, in an address to the press, stated, 

“The agreement represents a compromise, which means no one got everything they wanted. The Speaker and I made clear from the start that the only way forward is with a bipartisan agreement. This agreement is an important step forward, and now it will go to the United States House and Senate. The agreement prevents the worst possible crisis, a default, for the first time in our nation’s history.”

Many stakeholders in the cryptocurrency space have criticized the US government and those supporting the 30% crypto tax. This criticism had arisen long before the issue of debt default came into the picture. Several prominent voices from the crypto ecosystem have hailed the debt ceiling bill. 

However, the United States government still has a lot of work to do regarding the debt default deadline, which is looming and expected to hit in June. While the bipartisan agreement is indicative of lawmakers attempting to move forward, the bill still has to go through a hugely divided House of Representatives, with several Republican lawmakers openly hostile to Speaker McCarthy. Voting on the legislation is expected to take place on the 31st of May. 

Crypto’s Growing Appeal 

Many US states have opened their doors for crypto miners to set up operations in their jurisdiction. In April, Arkansas announced that it was joining Texas and Montana to propose legislation that would ensure that Bitcoin mining firms were protected under the law. Furthermore, shares of Riot Platforms have seen an increase of nearly 80% since the 1st of March. Marathon Digital has reported an increase of over 37% in the same period.

The Digital Asset Mining Energy Excise Tax

The Biden administration had proposed the Digital Asset Mining Energy excise tax (DAME) as part of its budget for the fiscal year 2024. The proposal sought to impose a tax equal to 30% of the total cost of electricity consumed during operations. However, the proposed bill saw significant pushback from the cryptocurrency community, with even Democrats critical of the bill. United States presidential candidate Robert F. Kennedy Jr called the bill a bad idea and publicly aligned with the crypto community. Senator Cynthia Lummis also vehemently opposed the bill and told the audience at the Bitcoin 2023 conference that the tax would not happen. 

“America must welcome innovation, and digital assets are the future of financial innovation. A 30% tax hike on any specific industry is a blatant attempt by the administration to pick winners and losers. I will not let President Biden tax the digital asset industry out of existence.”

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.