# Crypto vs USA taxes By [Ermantraut ](https://paragraph.com/@ermantraut) ยท 2024-02-13 --- This edition of Thumbs' Update is presented by Crypto Tax Calculator, the official global tax partner of Coinbase. Boasting support for over 1000 integrations, including new chains like BASE, zkSync, and Mantle, along with an enhanced portfolio tracker and a dark mode option, Crypto Tax Calculator stands as my top software recommendation for the second consecutive year. With tax season looming, they generously offer a 15% discount to Thumbs' Update readers using the code TUTAKE15 at checkout. Hey there! ๐Ÿ‘‹ If you've been following my newsletter, you're aware of my enthusiasm for the web3 creator economy. Protocols like Mirror, Paragraph, and Zora have made it seamless for fans to support their favorite creators by minting digital collectibles. However, when these novel concepts emerged, pricing them became a challenge, resulting in both underpriced and overpriced collectibles. Zora, aiming for an optimal user experience, introduced the idea of protocol rewards. Zora's flat fee of 0.000777 ETH charged when minting an NFT is distributed among various project stakeholders, including the creator, referrers, the first NFT minters, and Zora itself. Source: Zora Source: Zora The protocol rewards have two versions: one for free mints, which favors creators, and one for paid mints, which benefits all other stakeholders. Zora's approach, akin to a tax within the protocol's ecosystem, has received positive responses, prompting other protocols to adopt similar reward structures. This leads us to the central theme of this month's newsletter: the role of taxes in supporting public goods. Public goods are essential but often struggle to sustain themselves. Historical examples, like the gilded age railroad development, demonstrate how private interests handling infrastructure can be inefficient and self-serving. Roads, for instance, were funded by the US government to ensure public benefits. Taxes play a crucial role in funding public goods, and the principles laid out by Adam Smith, a key figure in capitalism, emphasize the importance of proportional contributions, certainty in taxation, convenience for contributors, and minimal extraction from the public. Source: The Wealth of Nations (Book V, Chapter 2); Citation by Britannica While opinions on taxes may vary, the ability-to-pay principle suggests taxes should align with an individual's capacity to pay, whether through income, wealth, consumption, or inheritance taxes. Wealth taxes, in particular, are debated as a means to prevent concentrated wealth and power imbalances. Switching gears to crypto tax basics, especially focusing on capital gains, which are the profits or losses from asset sales. In Canada, capital gains are calculated by subtracting expenses from the sale price, and only 50% of the gain is taxable. The taxable amount is then subject to progressive income tax rates. In the US, short-term capital gains (assets held for under a year) are taxed as ordinary income, while long-term capital gains (assets held for over a year) are taxed at a lower, flat rate. Navigating crypto taxes can be challenging, but keeping detailed records is crucial. Specialized software like Crypto Tax Calculator can streamline this process. Don't forget, they're offering a 15% discount with the code TUTAKE15. Moving from sponsors to patrons, the support of readers is what makes this content possible. The new Subs Up subscription, powered by Fabric's Hypersub protocol, provides a way for patrons to support the newsletter while enjoying perks like Q&A sessions, recognition, and exclusive NFTs. A question from a patron explores the positive culture forming around crypto projects. The shift from speculative trading to a focus on building is attributed to the perseverance of builders and decentralization enthusiasts through bear markets. Examining projects like Zora, Basepaint, Farcaster/DEGEN, and Mirror reveals commonalities: easy-to-understand concepts, abstraction of technical complexities, collaborative environments, cost-effectiveness on Layer 2, and value accrual to creators and contributors. In summary, these projects exemplify the power of web3 in improving user experiences and fostering collaborative, value-driven cultures. --- *Originally published on [Ermantraut ](https://paragraph.com/@ermantraut/crypto-vs-usa-taxes)*