Biden proposes 30% tax on crypto mining

https://taxfoundation.org/research/all/federal/biden-budget-2025-tax-proposals/

by nullbyte • 2 years ago

74 128 2 years ago

taxfoundation.org

nullbyte2• 2 years ago

Some notable stuff:

- Corporate tax rate increases by 7% for all businesses

- 30% excise tax on electricity costs associated with crypto mining

fddrdplktrew6• 2 years ago

corporate tax increases will just get passed on to consumers...

And mining taxes on power usage is just ridiculous... why don't you add an extra tax on gold used for jewelry too? and luxury cars, yachts, and anything that isn't really useful?

Retric4• 2 years ago

Taxing profits can't directly be passed on to consumers because the point of profit maximization remains unchanged. IE if a restaurant makes more money charging 25$ for a meal than 30$ then increasing prices simply reduces profits.

What gets passed on is things that increase costs for the industry like property taxes. If every landlord in the city pays an extra 50$ a month/unit in property taxes you bet rent's going up to compensate.

ryandrake2• 2 years ago

why don't you add an extra tax on gold used for jewelry too? and luxury cars, yachts, and anything that isn't really useful?

These are all really good ideas... Great comment!

pwg• 2 years ago

why don't you add an extra tax on ... yachts

They tried that, back in November 1991.

https://en.wikipedia.org/wiki/Luxury_tax#United_States

It covered more than just yachts, but the biggest loser was the yacht industry, which saw sales plummet:

[quoting wikipedia]: The federal government estimated that it would raise $9 billion in excess revenues over the following five-year period. However, only two years after its imposition, in August 1993, at the behest of the luxury yacht industry, President Bill Clinton and Congress eliminated the "luxury tax" citing a loss in jobs.[6]

Atwood, Liz. "Boat dealers predict sales increase Luxury tax repeal helps ANNE ARUNDEL COUNTY BUSINESS". baltimoresun.com. Retrieved 23 August 2019.

[end wikipedia quote]

It turns out that luxuries are just that, luxuries, and the rich were more than willing to "do without" yet another yacht (or other luxury good) while the tax was on the books, and the tax never netted the "budget gains" its proponents predicted it would net, due to sales of all the taxed goods dropping off precipitously.

pfannkuchen• 2 years ago

The “luxury car” label gets applied to anything that isn’t aggressively cost cut IMO. True excessive luxury cars do exist, but the label is basically meaningless at this point.

ripjaygn• 2 years ago

corporate tax increases will just get passed on to consumers...

Like how the corporate tax decreases in 2018 got passed on to consumers...right? Don't we all remember the big deflation in the past 6 years? And all that money was totally not used for stock buybacks and what not, right?

whalesalad3• 2 years ago

trying to wrap my head around how this would be enforced.

what if 51% of your server duties are handling API requests for your SAAS or some bullshit product, and 49% is crypto? is your electric bill crypto related or is that just something you do with idle power?

or you start a company that builds battery storage to accumulate energy off-peak for some admirable "green purposes" - meanwhile another company (that you own) is a customer of this and uses power from that storage facility "free of charge" since it is a humble research project.

so many ways to loophole this.

power is power, if you are paying for it you should be able to use it how you please. considering marijuana is federally illegal, shouldn't power for grow operations be treated the same way? it's a slippery slope.

if they want to disincentivize crypto they need to do something about the tragic state of the us dollar.

dboreham2• 2 years ago

Definitely charge an extra tax if you're using Ruby...

8note• 2 years ago

If I was the tax man, I'd tell you to stop trying to evade taxes by mixing your traffic together, and charge you on the whole lot

appletrotter• 2 years ago

Diesel is diesel, if you're paying for it you should be able to use it as you please...

(don't look up what red diesel is if you don't want your bubble popped)

singhrac• 2 years ago

You're treating the law like a set of programmable rules, where in fact it is not. If you operate a "partial" crypto operation like you said, the IRS will ask you to open your books and show them how you account for your power usage.

I see this time and time again, but public officials aren't idiots. The IRS aren't idiots. Broad, non-specific laws are enforceable. Eventually the burden will be on you to prove you're not doing anything illegal. Fun fact: the vast majority of people who would make arguments like this are hiding an illegal crypto operation.

extraduder_ire• 2 years ago

My first thought was running a "district heating system" by moving the generated heat somewhere useful and "selling" it at a loss. Watt for watt, it's almost as efficient as resistive heating, but is probably not located near people would want piped heat.

power is power, if you are paying for it you should be able to use it how you please

different users have different rates in most regions depending on their demands. Some users even can get paid to use power, when the grid frequency goes too high.

mindslight• 2 years ago

It's enforced when you yourself declare how much electricity your mining operation used, because you want to expense that cost to avoid paying unnecessary income taxes. This isn't about personal activity, and frankly this reflex to argue against regulation of commercial entities as if they're aimed at individuals is odd. If you do your own individual-scale cryptocurrency mining and spend the resulting coins for your own personal uses, nobody is going to come knocking or really even care post facto - because it's obviously quite unenforceable at an individual level. What this really affects is industrial scale operations that report profits as fully system legible financial income.

dboreham2• 2 years ago

30% excise tax on electricity costs associated with crypto mining

Curious how you measure that electrons are flowing towards silicon calculating hash functions but only hash functions where the output is not used 99.99% of the time but once in a while goes into a bitcoin block.

throwaway345353• 2 years ago

I imagine it's like how weed grow houses don't have snow on the roof in winter, it's kind of hard to hide a MW scale bitcoin mining operation.

htatche• 2 years ago

It needs to be banned. The environment is orders of magnitude more important than the dollar.

winter-day• 2 years ago

I honestly cannot understand why crypto exists - and i'm repulsed by everyone I know in that field who works at companies like solano, etc.

tmn3• 2 years ago

Would you like to understand?

whalesalad3• 2 years ago

crypto in and of itself is a really cool and valuable tool. the hype bubble around it and subsequent power/environmental consequences are not good - but the tech is cool and should be appreciated. blockchain is also a great tool for the right usecases (distributed ledger)

xcv1234• 2 years ago

I honestly cannot understand why crypto exists

https://en.wikipedia.org/wiki/Hyperinflation_in_Venezuela

https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe

https://www.usinflationcalculator.com

StanislavPetrov2• 2 years ago

You can't understand why people want to be free from the shackles of government issued money? Arguments can reasonably be made about the viability of crypto, the stability and how useful it actually is, but it should be crystal clear why many people are desperate for mediums of exchange and stores of value outside of the government-controlled medium (crypto, gold or otherwise).

DrFalkyn• 2 years ago

Some people like the idea of a digital asset that is not under the control of any central authority

tmn3• 2 years ago

What would you specifically propose?

makotech221• 2 years ago

He's specifically proposing a ban lol

johndevor3• 2 years ago

Do you rail against fiat as well?

audunw3• 2 years ago

Fiat as opposed to crypto currency? Crypto is the most fiat currency imaginable. I know crypto bros tries to redefine reality to trick people into thinking crypto is somehow tied to real tangible value, but it’s just not.

Non-fiat currency is physically tied to the creation of real-world value, like say mining gold which has thousands of real-world applications. Traditional fiat currencies are fundamentally designed to be a proxy for real world value. In a well designed system it’s most of its creation is tied to debt issues to, say a gold mine or an oil well or solar farm. Cryptocurrency is - in its utter insanity - fundamentally tied to the destruction of physical value. That is, burning electricity while creating nothing useful. So: more fiat than fiat. Another huge step removed from the creation of real physical valuables.

Traditional currencies are far more efficient and a basic necessity for the economy to function at all.

Cryptocurrency is fundamentally unsuited to become a real currency by its very design. Every one I’ve seen so far has been made by people who seem to lack even the most basic understanding of what the main origin of currency is. (Hint: it’s not metal coins..)

yashg4• 2 years ago

It is such a tired argument now. Firs of all, the magical internet gambling tokens are not an alternative to "fiat" or world financial system. The global financial system consumes far less energy per transaction considering that billions of transactions take place around the world per second.

I really fail to understand the fetish of the crypto crowd with the word fiat and whatever they think it means. I get it, people just want to gamble and want to be ultra rich without doing anything, I am sure there are ways of doing that (gambling) without wasting a ton of energy.

ProjectArcturis4• 2 years ago

This will push it offshore, which is still a win for US consumers.

tazu• 2 years ago

A win for Proof-of-Stake?

perihelions2• 2 years ago

It's absurd to tax something that can so easily migrate to a different country. Of course, crypto mining is absolute wasteful crap. But this tax doesn't decrease the global crypto mining rate: all it does it shift the mining to a different country. And: unlike a lot of industries and heavy manufacturing, the local impact of a crypto mine is very one-sidedly positive—large amounts of cash injecting into the surrounding economy, particularly the energy sector and everyone who works in or profits from it.

I do agree that (this type of) crypto mining is a sad waste of resources, and globally suboptimal for the world economy. But there's more to rationality and to morality than making performative gestures against bad things.

toomuchtodo• 2 years ago

In many cases, US jurisdiction does not end at its borders, and they can’t outlaw crypto entirely (yet). You get done what you can get done, even if it pushes the externality to a country without the appetite to tackle it. That’s their power grid’s problem.

ikiris2• 2 years ago

They can shoulder the power grid for it then. Still a win.

ProjectArcturis4• 2 years ago

Crypto mining injects virtually zero dollars into the local community. If this passes, and miners move to, say, Mexico, what benefit does that grant Mexico? They'll have higher local electric costs. The bitcoins will be sold internationally and the owners will keep the money wherever they live.

perihelions2• 2 years ago

Buying electricity (wasteful as this use is) is an injection of cash into the local economy.

KerrAvon2• 2 years ago

Better things aren’t possible! Go centrism

kthejoker22• 2 years ago

Nah,pushing through negative externalities of wasteful industries to other more desperate economies is a cool use of first world power.

Also strong disagree that local impacts of crypto mines are net positive - here in Texas we have to pay miners not to burn electricity for their fantasy dollars just to keep the AC on at grandma's house in the summer.

Good riddance.

panarky• 2 years ago

here in Texas we have to pay miners not to burn electricity

It seems like lunacy when you put it that way.

But I'd rather pay crypto miners to shed load during peak times rather than suffer blackouts at hospitals, chemical plants and water treatment facilities.

Grid stability isn't a joke, and sometimes the least-bad option is still bad. Until we have better storage solutions, flexible demand is a necessary evil.

Maybe paying miners not to mine is a lesser evil than paying even more to spin up filthy coal peaker plants and still have rotating outages.

serf• 2 years ago

fantasy dollars

If you include all fiat currencies in that category I think that's a keen name.

If it's just a title to bad-mouth crypto in some arbitrary way -- well -- a lot of very real stuff has been bought with crypto, and name-calling generally attracts the very worst allies.

I get the energy concern, and mostly agree with you, but i'm not sure we should pretend that fiat currencies have these problems fixed.

Military backing for the sake of currency stability requires X amount of energy daily to facilitate, it's just not draining Texas. 'Not my problem'?

ryandvm• 2 years ago

Proof-of-work crypto mining is particularly egregious because it is quite literally zero sum. The world's Bitcoin miners could spend 100 watts mining crypto or 100 gigawatts mining it and due to the nature of the algorithm, the outcome would be the same number of mined blocks.

fxd123• 2 years ago

doesn't decrease the global crypto mining rate

It doesn't- but why would Biden care about that? If it moves to a different country then it reduces demand in our local grid. That's a GOOD thing.

xk_id• 2 years ago

I do agree that (this type of) crypto mining is a sad waste of resources

Wait until you hear about generative AI spam!

https://news.ycombinator.com/item?id=39670900

seanmcdirmid4• 2 years ago

We might need a Dyson sphere around the sun to support AI porn. And everyone thought EVs would bring our grids down.

Gibbon1• 2 years ago

I feel instead of taxing it we should just make it illegal and toss people in prison for doing it. If it goes to another country that's their dead weight loss.

BenoitP• 2 years ago

It's absurd to tax something that can so easily migrate to a different country

It creates an incentive in that country to tax it. If you have followed EU's Carbon Border Adjustment Mechanism, it is exactly how the EU intends to export its legislation. It says: your imports are going to be taxed on their CO2 emissions, unless you implement a tax of your own on their CO2 emissions. The exporting country now has every incentive to tax it and remove the tariff.

DecentRecruiter• 2 years ago

This is national policy-making, so why would a country care about the effect outside of its borders?

I understand that US national policy is not done in a vacuum, but it seems reasonable for a nation to start with its best interests in mind.

What do you think?

lamontcg• 2 years ago

the local impact of a crypto mine is very one-sidedly positive—large amounts of cash injecting into the surrounding economy, particularly the energy sector and everyone who works in or profits from it.

driving up costs of electricity due to increased demand and encouraging the continued use of fossil fuels isn't positive. it is good for the wealth of the energy sector but a negative drag on everything else.

KerrAvon2• 2 years ago

note: taxfoundation.org doesn’t seem to be nonpartisan

kristianp• 2 years ago

Actual title: President Biden Outlines Vision for Higher, More Complicated Taxes in State of the Union Address and FY 2025 Budget

Edit: The hacker news guidelines say don't editorialise the title.

"Otherwise please use the original title, unless it is misleading or linkbait; don't editorialize.".

https://news.ycombinator.com/newsguidelines.html

dpc_012342• 2 years ago

Mining is actually good for stabilizing grid, which is very important for accommodating renewables.

Yes, mining is "wasting" electricity, but it's not a full picture. Sometimes being able to "waste" electricity is actually very useful. Mining is a immediately reactive and flexible load on the grid, and in a free market , at the near-perfect competition, mining naturally gravitates to places where electricity is abundant and can benefit from doing something productive (burning off methane, capture over-production).

People who wish to ban or "harm" mining have no idea what they are talking about. Electricity is not something that can sit in a basement and wait to be used indefinitely if someone doesn't just "waste" it. That's just not how things work.

From the perspective of cryptocurrency users banning also completely doesn't matter. If you ban mining in place X, then too bad for the miners in X, mining will just move to a different location, where possibly electricity might be less clean (not from renewables), and on the global scale things just get worse.

novia• 2 years ago

We can use the excess production to do other things, like desalinate water.

yrral• 2 years ago

That is very location dependent as you need to transport water to where it's needed. Mining can happen almost anywhere.

jedberg• 2 years ago

What a funny way to say "carbon tax".

Why not just go all out and propose a carbon tax and credit system? I guess that's too complicated for the electorate to understand?

lend000• 2 years ago

Not sure why you're being downvoted, but a carbon tax is a little too elegant to expect from a modern politician. This is far messier and more arbitrary. And just one of numerous proposed changes (the linked page is only tangentially about crypto mining).

paulmd• 2 years ago

Carbon taxes were a pretty popular topic of discussion until the democrats lost congress in 2010. It’s just another thing that’s fallen by the wayside while our democracy struggles at the lower levels of the pyramid of self-actualization.

woodruffw2• 2 years ago

Raising the corporate tax rate from the current 21 percent to 28 percent, combined with the average state-level corporate tax rate, would give the U.S. the second-highest combined corporate tax rate in the OECD, significantly worsening the competitive position of U.S. businesses and reducing prospects for business investment and workers.

This is pretty misleading: the US's effective corporate tax rate is significantly below the OECD average[1], and has been so for a while. The Tax Foundation could lay the blame for this on tax complexity, but curiously only seems to blame tax complexity when taxes go up for businesses, not down.

[1] https://stats.oecd.org/index.aspx?DataSetCode=CTS_ETR

nullbyte2• 2 years ago

Those are the current stats. If the corporate tax rate is raised to 28%, as Biden is proposing, the US would be far above the average.

woodruffw2• 2 years ago

If I'm reading this list correctly, an effective 28% corporate tax rate would put us in the middle of the OECD pack. But even then: raising the statutory rate to 28% does not actually guarantee that the effective rate rises to 28%.

Edit: By the Tax Foundation's own calculations, the OECD average effective rate is around 26% when adjusted by GDP[1]. So 28% is not extraordinarily out of band, especially when we consider that that's statutory and not effective.

[1] https://taxfoundation.org/data/all/global/corporate-tax-rate...

Havoc• 2 years ago

Good luck enforcing that

kennu• 2 years ago

This is not about crypto mining per se, but the electricity used:

Impose a new 30 percent excise tax on electricity costs associated with digital asset mining

Seems like an effective incentive to migrate cryptocurrencies from Proof-of-Work to the more eco-friendly Proof-of-Stake. Ethereum already did this two years ago.

tareqak• 2 years ago

I think crypto-mining could be help with bringing on more electricity from renewable resources online faster and more gracefully in the absence of sufficiently large scale grid batteries.

Imagine a solar or wind power plant that currently has sufficiently problematic swings in electricity production. A crypto-mining data center nearby could consume some if not all of this problematic excess electricity production more gracefully than disabling sections of the solar or wind power plant. In this application, crypto-mining would not be the primary reason to have all of this crypto-mining hardware. As the local grid requires more power generation, crypto-mining nodes could be turned offline to offset their electricity use.

This thought is just something I had, and there might be problems with it.

Justin_K• 2 years ago

Got to raise taxes to pay for all the bullshit spending. Why don’t they just tax excess power usage?

Ylpertnodi• 2 years ago

30%?

yashg4• 2 years ago

Just outright ban the stupid planet burning ponzi. If the habitual gamblers want to gamble with make believe internet tokens, let them do it with tokens that don't waste a country full of energy. I am sure they can cook up some story to keep the crowd engaged.

Ajedi32• 2 years ago

The thing people who are against crypto mining miss is that the cryptocurrency industry is economically self sustaining. Electricity burned on mining crypto is not wasted, it is used to maintain a system that is objectively more economically valuable than the electricity itself is.

Trying to regulate what people are allowed to spend their money on just because you personally don't agree those things are valuable is a fool's errand.

To the extent there are negative externalities associated with electricity use those externalities are not specific to crypto, therefore singling out crypto for attack just because it uses electricity is unfair and harmful to the broader economy.

pupppet2• 2 years ago

Crypto more important than electricity?

And crypto doesn’t use electricity, it wastes it in on a completely arbitrary task.

pupppet2• 2 years ago

Uh oh crypto bros pushing back

Biden proposes 30% tax on crypto mining

Related Stories