The government does not have the right to tax Bitcoin because it does not require administrative effort to manage property rights, says Bill Miller IV, chief investment officer of Miller Value Partners.
“For them to reach out there doesn’t make much sense,” Miller told Natalie Brunell on the Coin Stories podcast on Wednesday.
The blockchain does the property recording, not the government
Miller, known for his early advocacy of Bitcoin (BTC), said that Bitcoin does not rely on government infrastructure to verify or enforce property rights, unlike traditional assets such as real estate.
“When you buy or sell a house, all those registration taxes, all those taxes go to keep track of who owns what,” Miller said.
“The reality is that if you think about why you pay taxes in society, it’s to reinforce property rights,” he added.
Miller said this is not necessary with Bitcoin. “The government didn’t create Bitcoin, so that’s an important point to keep in mind,” he said, adding:
“The blockchain does that property automation on its own, right?”
Earlier this year, rumors circulated that U.S. President Donald Trump’s son, Eric Trump, proposed eliminating capital gains taxes on certain U.S.-based cryptocurrencies. Regarding the possibility of Bitcoin being exempt from capital gains tax, Miller said: “Whether that happens or not, who knows, but it's really nice that there’s no short-selling rule on Bitcoin.”
When asked if he sees Bitcoin someday having a property tax, similar to how properties are taxed annually in the U.S. based on market value, he says he’s not sure, but “there’s a good argument for it not to.”
The uncertainty regarding Bitcoin taxation signals “it’s still early”
Meanwhile, Miller said traditional asset managers still face hurdles when buying Bitcoin, mainly due to uncertainty surrounding taxation.
“Even as fund managers, we still have huge barriers to actually buying it because of the bad income tax rules if we buy ETFs and sell them at the wrong time, so all of that needs to be resolved,” he said.
“That’s why I keep saying it’s still early, because the tax rules on this are really interesting,” he added.
