Trump Proposes Eliminating Crypto Capital Gains Taxes and Introducing Tariffs
In a recent interview, Donald Trump proposed eliminating capital gains taxes on cryptocurrency transactions, a move that could revolutionize the way digital currencies are used in the U.S. Trump argued that taxing crypto for everyday purchases, such as buying a coffee with Bitcoin, discourages adoption and penalizes users unfairly.
Trump’s Stance on Crypto Taxes
“They have them paying tax on crypto, and I don’t think that’s right,” Trump stated. “Bitcoin is money, and you have to pay capital gains tax if you use it to buy a coffee? Maybe we get rid of taxes on crypto and replace it with tariffs.”
This proposal directly addresses a long-standing frustration among cryptocurrency users: the complexity of tracking and paying capital gains taxes on small, everyday transactions. Currently, users must pay tax on any increase in the value of Bitcoin or other cryptocurrencies between the time of purchase and use, adding a layer of financial and administrative burden.
Competing Visions on Capital Gains Taxes
Trump’s proposal contrasts sharply with recent Democratic plans. Vice President Kamala Harris has suggested increasing the top rate for long-term capital gains to 28% for individuals earning over $1 million, while President Biden’s proposed 2025 budget pushes this rate even higher, to 39.6%. Both plans aim to target high-income earners but face resistance from Republicans, who argue against raising taxes further.
Should Trump win the presidency and Republicans control Congress, capital gains tax hikes would likely be ruled out, according to Erica York, senior economist at the Tax Foundation.
Focus on U.S. Tokens and Bitcoin
Trump’s crypto tax plan would eliminate capital gains taxes on U.S.-produced cryptocurrencies, encouraging their use in daily transactions. The plan explicitly excludes tokens made in China but includes major cryptocurrencies like Bitcoin and XRP. Ethereum and most other tokens, however, would not qualify under Trump’s proposal.
This stands in contrast to Italy’s decision to impose a 42% tax on Bitcoin capital gains, positioning Trump’s proposal as a crypto-friendly alternative aimed at boosting the domestic blockchain economy.
Replacing Income Taxes with Tariffs
In addition to his crypto tax plan, Trump has floated the idea of replacing federal income taxes with tariffs. Speaking on The Joe Rogan Experience, he questioned why tariffs couldn’t replace income taxes.
“When we were a smart country, in the 1890s … this is when the country was relatively the richest it ever was. It had all tariffs. It didn’t have an income tax,” Trump noted during a discussion with barbers in the Bronx. However, replacing income taxes with tariffs would require a substantial increase in tariff rates, as tariffs currently contribute just 2% of federal revenue.
Challenges and Goals
While replacing income taxes with tariffs remains a long-term vision, Trump’s immediate goals focus on extending provisions from the 2017 Tax Cuts and Jobs Act and implementing targeted tax cuts. His campaign has also emphasized reducing tax burdens on tips, Social Security benefits, and overtime pay.
Critics argue that eliminating taxes such as the net investment income tax (NIIT) could significantly worsen the federal budget deficit, which reached $1.8 trillion in fiscal 2024. Trump’s proposals have sparked debate over their feasibility and potential impact on the economy.
Conclusion
Trump’s tax proposals—particularly the elimination of crypto capital gains taxes—highlight his campaign’s emphasis on reducing financial burdens for individuals while promoting domestic cryptocurrency adoption. However, the broader implications, including their effect on federal revenue and economic inequality, remain points of contention. As the 2024 election approaches, these plans will undoubtedly remain a focal point in policy debates.
