(Kitco News) – The 2024 election cycle is different from its predecessors in that cryptocurrencies have become a key issue for voters, and while Presidential candidate Donald Trump is widely seen as better for the industry, his most recent proposal regarding capital gains taxes for U.S. crypto holders is likely to cement his support from the ecosystem.
As reported by Good Morning Crypto in an X post, during a recent interview, Trump discussed a conversation with a friend regarding the U.S. tax structure, which led to him proposing to remove capital gains taxes on cryptocurrency transactions.
“They have them paying tax on crypto, and I don't think that's right,” Trump said. “Bitcoin is money, and you have to pay capital gains tax if you use it to buy a coffee? I was talking with a friend. He said, 'It really shouldn't be taxed,’ and I agree. Maybe we get rid of taxes on crypto and replace it with tariffs.”
The comments strike at the heart of what many crypto users say prevents them from using digital assets for everyday purchases. Currently, if someone uses Bitcoin to buy a cup of coffee, and the value of that Bitcoin has increased since it was purchased, they are required to pay a capital gain tax on the difference, a hassle that many elect to avoid.
Trump’s proposal would eliminate this, opening the door for US-made cryptos to be used in everyday transactions.
“No tax on crypto but only on tokens made in the USA,” Trump added. “We want tokens made here at home; we don't want the Chinese tokens. We say, get those Chinese tokens out of here,” highlighting his focus on supporting U.S. businesses and keeping money within the country.
While Trump's proposal wouldn’t apply to most tokens, including Ethereum (ETH), many of the most popular digital assets, such as Bitcoin (BTC) and XRP, would be included. According to Trump, the remainder would be taxed out of the U.S. economy.
The crux of Trump’s argument is that Bitcoin and many other cryptos are just like any other type of money, and using them should not come with extra taxes. This aligns with other statements Trump has made regarding taxes, with the Presidential hopeful even going so far as to call for eliminating income taxes in lieu of higher tariffs.
“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 said while speaking with a group of barbers in the Bronx. “Now we have income taxes, and we have people that are dying. They’re paying tax, and they don’t have the money to pay the tax.”
Trump reiterated the idea during his appearance on the Joe Rogan podcast after Rogan asked him if he was serious about replacing federal income taxes with tariffs.
“Yeah, sure, why not?” Trump said.
Notably, the individual income tax is responsible for nearly $5 trillion in revenue that the federal government collects, which is why Trump mentions raising tariffs to recoup the revenue loss. Economists have highlighted that currently, tariffs only bring in about 2% of federal revenue, which means he would need to significantly increase them to make up the difference.
Understanding that such a move would take time to be incorporated, Trump campaign senior adviser Jason Miller told reporters Saturday that eliminating the income tax could be a future “aspirational goal,” noting that the former president’s top priorities would be extending the expiring provisions of his 2017 Tax Cuts and Jobs Act and implementing the targeted tax cuts that Trump has rolled out.
Reducing the tax burden on Americans has become a key talking point for Trump’s campaign. He previously promised to eliminate taxes on tips, Social Security benefits, and overtime pay. While he has repeatedly discussed removing income taxes for the average citizen, he has not commented on whether he would eliminate federal corporate income and payroll taxes.
For now, his talk about eliminating taxes on U.S.-made cryptos is widely seen as campaign trail musings, but many in the industry are hopeful that he will follow through if he is ultimately elected as the next President.
