The tax situation is a mess and unfavorable to all parties
There have been several posts on the subject of blockchain taxes and even if we find a way to help the majority of Steemit account holders to reduce their legal and regulatory risks, we still will remain in a very unfavorable dangerous and confusing tax environment. It is possible for account holders to owe more in taxes than their account is worth in some circumstances.
The solution
It is in the best interest of all on Steemit, all who hold Ethereum or anyone who has significant holdings of any crypto, to try to reduce their own risks. The best way to do that in my opinion is by contacting members of congress and by promoting the activities of CoinCenter.
The Blockchain Caucus is a group of congress persons who you can and should contact. These are the policy makers who are in a position to vote in the laws which dictate the future of the blockchain. The Blockchain Caucus must be made to understand some of the issues with the IRS, and the confusion with regard to taxes. The goal of contacting the Blockchain Caucus should be to convince them of the requirement to simplify the tax code as it regards blockchain and virtual currencies. The simplification which most of us probably want is simply to make it clear that holders of virtual currencies will be income taxed upon sale into fiat but not prior. This one change would solve the problem on Steemit entirely and end the confusion, but it would require either changing the tax code or the IRS clarifying the interpretation of the current code.
Of course I'm not a think tank or policy maker and there could be other ways to simplify the tax code. The taxes are simply too complicated and if left as is, it will suppress mainstream adoption of blockchain technology. It would seem a Blockchain Caucus would have the goal of promoting mainstream adoption of blockchain technology so they would be the group to contact.
If you agree with this strategic plan of action then please vote up this post and resteem it.
If you are a voter in Colorado: https://polis.house.gov/
If you are a voter in Arizona: https://schweikert.house.gov/
" The simplification which most of us probably want is simply to make it clear that holders of virtual currencies will be income taxed upon sale into fiat but not prior. "
This is not the simplification we want, unless you want to start being taxed on anything the government concludes has monetary value. Do you know how abusive self-employment taxes are?
This logic would justify taxing WoW Gold and Facebook Likes - both can be bought on the open market.
Capital gains with cost basis @ liquid cash value when received. Even THAT Is a huge compromise, because Steem Power is basically Reddit Karma - community charity/tipping.
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We already are taxed according to the tax code so I don't know how you figure it would be a new tax. And yes I know about self employment taxes. Most bloggers on Steemit have to pay them unless they are anonymous.
What would you suggest is more simple than taxing fiat income?
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Yes regardless if we agree or disagree, the conversation is a necessary one, thank you for providing this information, has to start somewhere..
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Keep in mind that, whatever the reason, we make history. We are pioneers!!
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@dana-edwards I think that taxing the profits you made once you convert back into fiat is indeed the best option, otherwise imagine what a mess it would be to track down all the conversions and all the cryptos somebody has in his portfolio. That would be an accountant nightmare :)
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what about the POTUS council? they can advice on this I think ..
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These issues are more important now than ever, as we get closer to some sort of regulation. There is a lot of confusion going on now. As usual people will not contact anyone and even if they do, the pawns in congress will still act on behalf of their employers "Corporate America".
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Don't you think Corporate America is pro blockchain?
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Corporate America is basically controlled by the banks which control the government.
So, no.
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Explain the EEA.
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Take advantage of options that you do have. That's just my message
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You are lucky in your America your congresmen work for you people. In my country congressmen work for lobby who pay them NOT the people. All laws they make is against us to help their owners who pay them. You are lucky in America they make laws against companies and special interest and for the benefits of you Americans. You are very lucky!
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The US government is completely owned by lobbyists and cronies. They are among the most corrupt in the world, just better at hiding it.
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But I hear on American tv shows in my country that you Americans are land of the free and for the people by the people. You are saying this show lies?
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Indeed.
Can you name a regressive regime that did not claim to be "for the people"? The worse they are, the louder they proclaim it.
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I don't' know I want to move to country that is free for people , has law that regulate rulers not free people, has bill of right to protect people and is by the people for the people not for lobbyist like in my country. I WANT TO MOVE THERE and enjoy freedom! I hate my life in Easter European tyranny!
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There may be a small country somewhere close to that, but honestly, true freedom requires money. Lots of it.
I define freedom as total control over one's time, incidentally.
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I agree with @deismac and I work within government here in the US.
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My impression is quite the opposite regarding US. Obviously you have a lot of congress-people that do work in the best interest of the people, but if you take a look at the perverted regulations they have over there, its looks like even the local taxi driver can purchase a little bit of lobbying.
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Blockchain can form a Steemit lobby if that is the case, I mean whatever the format is and whatever the rules are. I just suggest that we win according to the rules.
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I think the tax code needs to be simplified overall. Blockchain code is just a drop in the bucket of what needs addressing. http://time.com/4286921/complex-tax-code/
https://www.usatoday.com/story/news/politics/2014/04/02/irs-commissioner-urges-congress-to-simplify-tax-code/7215107/
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I definitely think something has to be done in order to clarify how taxation is handled regarding cryptocurrencies. Here on Steem it is probably going to be possible to create an application that can calculate potential taxes on Steem earnings. However, even with such an application, it can be rather difficult to clearly calculate taxes if the value highly depends exchange rates between normal fiat currencies and cryptocurrencies. I do agree with you that this would be greatly simplified if the money is taxed when converted into a fiat currency.
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It would be not only greatly simplified, but also fair, it taxes from cryptocurrencies would be asked for instead of collected by force.
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They talk tax and stuff but do they have someone to explain what the blockchain is and how cryptocurrency works? Like someone actively involved, not some "experts"
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Good one..I agree ...upvoted
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Dana, to be honest, I don't think that the best strategy is to pay taxes from any crypto gains (or crypto-whatever). The government did nothing in order this (crypto gains) to happen. I mean literally nothing. Moreover, it continues to insert sticks into the wheels. Why should it receive something?
Such behavior will support ongoing legal theft of the state, that is not a good for the following generations.
The good strategy is to hide incomes and activities behind different anonymity layers and continue to invest into decentralized (and truly global) alternatives of governmental services.
I decided downvote this post because I completely disagree with you and do not want to support such behavior from a common budget.
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If you disagree you disagree, but it doesn't change the fact that the government will put people in jail if they don't comply. If you don't mind going to jail or paying large fines it is your personal decision and we aren't required to agree in terms of risk reduction strategy.
I suppose a person who is completely anonymous, and who never intends to spend their crypto in the official economy, can take the stance you take of ignoring taxes. If they intend to operate in the official economy then they have to pay the taxes. Mainstream users are never going to go the anonymous route, so like I said if you want crypto to just be a toy for anarchists then your strategy is fine but mainstream adoption requires compliance.
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Howdy @dana-edwards, nice share. I am a quite new member who recently joined. It would be awesome if you would take a minute to look at my blog and click the follow button if my writing interests you. Much appreciated.
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I am your new follower
I wish you a lovely time
Love your hard work
Best Regards Andrei
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Not sure how possible this is but a simpler solution seems to be to tax people at the point of sale when using crypto to purchase goods and services instead of people having to be taxed on their gains.
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