Increase gross income exclusion from $200 to $5000

[jonmarrs]

The $200 exclusion from gross income is too small. The exclusion amount should be increased to at least $5,000. People routinely spend more than $200 every time they go to the grocery store. Medical bills are typically over $200. Some households spend over $200 on their monthly electric bill and cellphone bill. People are now paying $100-$200 to fill up their gas tank. Inflation has already made the proposed $200 exclusion limit obsolete. For example, it should be possible for someone to make a monthly car payment or pay their monthly mortgage bill with cryptocurrency without paying taxes. The exclusion limit must be increased to allow common daily/weekly/monthly expenses to be paid without incurring taxes and the associated record-keeping. This higher exclusion limit of $5,000 will allow cryptocurrencies (e.g., Bitcoin via the Lightning Network) to be used as a medium of exchange in the United States, which is important for upgrading our slow, expensive, and outdated legacy financial system.

[Bowero]

But this is not about the wealth you have in cryptocurrencies, right? This is only about the profits you've made. Why shouldn't those just be taxed like other profits?

[vitarb]

While I agree that $200 is probably too low, as it won't cover a lot of everyday transactions, my main issue is not with the number itself, but rather with the fact that it's unclear how it was derived. I think before we agree on the methodology, any value will look random.

Here are couple of proposals I had on how we can better calculate this:

• Based on spending - Use percentile (e.g. p99) of a large sample of grocery/online/restaurant bills (or equivalent). This approach ensures that only small percentage of regular transactions should hit the taxable threshold.
• Based on income - Use average income (or equivalent) as a base for calculation. This method is less accurate as it tries to approximate size of the average purchase based on income.

[NathanPeake]

I think it should be at £0.0000000 to better reflect the real value.

[reeserj]

The most logical is to just strike this portion from the bill.

Citizens are already required to report profits. Adding an arbitrary cash value threshold violates an individuals privacy.

[jonmarrs]

I would prefer for there to be no exclusion limit at all. All financial transactions should be tax-free if we want to use cryptocurrencies as a medium of exchange. However, I am not sure if Congress will allow crypto transactions to be tax-free. People already pay sales tax whenever they buy something. I would prefer an additional 1% sales tax on transactions that would go to the Federal government rather than some arbitrary exclusion limit to adjusted gross income. The point should be to eliminate record keeping and to eliminate friction in financial transactions. Instead of giving Visa/MasterCard/AmEx 2% or 3% of a financial transaction every time I swipe a debit/credit card, I would prefer to give the Federal government 1%. This might be a good compromise.

[jonmarrs]

If you live in Manhattan or San Francisco, your monthly rent can easily be $5,000. That is one reason why I think an exclusion limit of at least $5,000 is appropriate, if there will be an exclusion limit at all. People should be able to pay their rent every month without having to deal with burdensome record-keeping. Otherwise we are just protecting the banks and legacy financial system and stifling innovation while preventing free market competition to lower prices, create value, and improve transaction speed and user experience for consumers.

[jonmarrs]

We also need to consider that businesses/vendors will choose to denominate their prices in bitcoin instead of USD. There are already many Americans who are living on a Bitcoin Standard (all their savings and financial transactions are in Bitcoin instead of USD). Due to the floating exchange rate between BTC and USD, there should also be a BTC-denominated exclusion limit. Bitcoin was as cheap as ~$3,500 just over two years ago. This would put 1 bitcoin below the proposed $5,000 exclusion limit. Due to the fluctuations in Bitcoin's USD exchange rate, I would suggest a parallel exclusion limit of 1 bitcoin (100,000,000 satoshis). The greater of $5,000 or 1 bitcoin will be the exclusion limit. That way people who transition to a Bitcoin Standard will not have to deal with record keeping. Any transaction less than or equal to 1 bitcoin will not be taxed. Transactions greater than 1 bitcoin can be taxed. Otherwise if 1 bitcoin is less than $5,000 then transactions less than or equal to $5,000 will not be taxed.