Bill Overview
Title: Virtual Currency Tax Fairness Act of 2022
Description: This bill excludes from gross income, for income tax purposes, up to $200 of gain from the disposition of virtual currency in a personal transaction. The bill defines virtual currency as a digital representation of value that is used as a medium of exchange and is not otherwise currency.
Sponsors: Rep. DelBene, Suzan K. [D-WA-1]
Target Audience
Population: Individuals who own or use virtual currencies
Estimated Size: 21000000
- The legislation specifically addresses the taxation of virtual currencies, which means it directly impacts those who own or use virtual currencies.
- The global number of individuals involved in using or trading cryptocurrencies has been increasing, with millions of users worldwide.
- Virtual currencies, or cryptocurrencies, are becoming more popular as a medium of exchange, investment, and asset diversification.
- According to research, as of 2021, there are more than 100 million cryptocurrency users worldwide. This number is likely higher in 2023.
- Users of virtual currencies are spread across the globe, and this legislation impacts their tax liabilities.
- The tax exclusion is specific to the United States tax system but will affect international holders who engage in transactions within the U.S. or with U.S. entities.
Reasoning
- The target population of this policy involves individuals who own or use virtual currencies, particularly in personal transactions. According to data, the number of American adults involved in cryptocurrencies is substantial, and the policy aims to alleviate the tax burden on small personal gains.
- Given the number of individuals potentially impacted is approximately 21 million in the U.S., a broad spectrum of demographic profiles should be considered, including various ages, occupations, and levels of involvement in cryptocurrency.
- The policy is likely to have a 'medium' to 'low' impact for most users, as the $200 gain exclusion removes a relatively small tax burden for typical small-scale transactions.
- Not every user will be impacted equally, as some do not engage in frequent personal transactions or have gains above the $200 limit. Thus, there are people whose wellbeing will not significantly change, while others with recurring smaller transactions might benefit more noticeably.
Simulated Interviews
Software Engineer (San Francisco, CA)
Age: 30 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 15/20
Statement of Opinion:
- I think this policy is a great step towards normalizing crypto transactions in day-to-day life.
- It might not change a lot for me personally, but it's a good start.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Financial Analyst (New York, NY)
Age: 45 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 14/20
Statement of Opinion:
- It's a small benefit, but every bit helps when managing different investment vehicles.
- The policy is good, but more comprehensive measures are needed.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Student (Austin, TX)
Age: 22 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 10/20
Statement of Opinion:
- I don’t make a lot of profit from crypto, so this policy seems cool but not life-changing for me.
- Crypto feels more legitimate with policies like this.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Real Estate Agent (Chicago, IL)
Age: 50 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- It's nice to see some tax relief in crypto; it'll help me save some money over the years.
- I'm always a bit on edge with taxes and crypto, so this reduces some anxiety.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Freelancer (Seattle, WA)
Age: 28 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- The policy is decent, maybe could use a bigger exclusion range for it to be really impactful for freelancers like me.
- It's a step in the right direction, but there could be more.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 7 | 5 |
| Year 20 | 7 | 5 |
Entrepreneur (Miami, FL)
Age: 38 | Gender: male
Wellbeing Before Policy: 9
Duration of Impact: 10.0 years
Commonness: 6/20
Statement of Opinion:
- It's a positive move and can help in educating people about manageable crypto transactions.
- It doesn't affect my business much, but it builds trust in the ecosystem.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 9 | 9 |
| Year 2 | 9 | 9 |
| Year 3 | 9 | 9 |
| Year 5 | 9 | 9 |
| Year 10 | 9 | 9 |
| Year 20 | 9 | 9 |
Graphic Designer (Los Angeles, CA)
Age: 41 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 10/20
Statement of Opinion:
- Any tax relief is great for small transactions, makes things less stressful.
- There needs to be more clarity in favor of freelancers.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
Data Analyst (Denver, CO)
Age: 29 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 20.0 years
Commonness: 16/20
Statement of Opinion:
- It's a small but encouraging step towards easing crypto usability in daily life.
- I assume it will be more relevant as I engage more.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Stay-at-home Mom (Salt Lake City, UT)
Age: 35 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 20.0 years
Commonness: 17/20
Statement of Opinion:
- It could benefit me during my occasional use.
- Crypto is a nice little hobby, so every financial relief is welcome.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Retired (Rural Ohio)
Age: 55 | Gender: male
Wellbeing Before Policy: 5
Duration of Impact: 0.0 years
Commonness: 18/20
Statement of Opinion:
- This policy probably doesn't affect me much personally but it's good for those younger or more involved.
- It's nice knowing there's slow progress in understanding crypto market needs.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 5 | 5 |
| Year 3 | 5 | 5 |
| Year 5 | 5 | 5 |
| Year 10 | 5 | 5 |
| Year 20 | 5 | 5 |
Cost Estimates
Year 1: $420000000 (Low: $320000000, High: $500000000)
Year 2: $430000000 (Low: $330000000, High: $520000000)
Year 3: $440000000 (Low: $340000000, High: $540000000)
Year 5: $460000000 (Low: $360000000, High: $560000000)
Year 10: $500000000 (Low: $400000000, High: $600000000)
Year 100: $1000000000 (Low: $800000000, High: $1200000000)
Key Considerations
- The popularity and usage of cryptocurrencies are rapidly growing, influencing the potential tax base and related exclusions.
- Estimations are highly sensitive to factors such as the market value of cryptocurrencies, transaction frequency, and taxpayer awareness of the legislative change.