The government does not have the right to tax Bitcoin because it does not require administrative effort to manage property rights, says the director of investments at Miller Value Partners, Bill Miller IV.
"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 maintain control over who owns what," Miller said.
"The reality is that if you think about why you pay taxes in society, it is to reinforce property rights," he added.
Miller said that this is not necessary with Bitcoin. "The government did not create Bitcoin, so that is an important point to keep in mind," he said, adding:
"The blockchain does that ownership automation by itself, right?"
Earlier this year, rumors circulated that the son of U.S. President Donald Trump, 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 very nice that there is no short-selling rule on Bitcoin."
When asked if he sees Bitcoin ever having a property tax, similar to how properties are taxed annually in the U.S. based on market value, he says he is not sure, but "there's a good argument for it not to have one."
The uncertainty around Bitcoin taxation signals "it's still early"
Meanwhile, Miller said that traditional asset managers still face hurdles when purchasing Bitcoin, mainly due to uncertainty around taxation.
"Even as fund managers, we still have huge hurdles to actually buy 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.
