Bitcoin Forum

The proposal to pay taxes using Bitcoin has gotten a bit of a bad wrap in the community and I think that is misguided.


Paying Taxes With Bitcoin Is A Win-Win-Win

If this bill passes and Bitcoin can be used to pay taxes without triggering capital gains taxes, that benefits everyone involved.

• Tax receipts would increase the Strategic Bitcoin Reserve to benefit America.
• The taxpayer can repurchase Bitcoin at current market rates, thereby raising their BTC cost basis for future tax benefit.
• The market would have BTC removed from supply forever to be placed into the SBR and will have buying pressure as that spent BTC is repurchased by the taxpayer.

A win for America.  A win for the taxpayer.  A win for the Bitcoin market.  

We should all be hoping this bill passes.  If it does, anyone with unrealized capital gains on their BTC should consider paying their taxes in Bitcoin and buying more to replace it.

Thoughts?

Having alternatives is always good, so if bitcoin can be used directly to pay tax, it will really will be good and many people will accept it. But I will prefer to use fiat to pay the tax and hold the bitcoin that I supposed to use to pay the tax.

But if the government will not convert the tax paid in bitcoin to fiat, I will prefer to pay the tax in bitcoin and convert more fiat to bitcoin instead. But I doubt if the government will not convert the tax to fiat.

He government already came out and said that they would never sell any Bitcoin they take in. They also said they were looking for budget neutral ways to accumulate more Bitcoin. I don’t know if accepting Bitcoin for tax debts falls into budget neutral territory, but I’m fairly certain they wouldn’t sell any BTC they take in.

I think it is a great idea to me, as it would seem to recognize Bitcoin as an official currency for the payment of (tax) debts.  If enacted, it seems that it would pave the way for the federal government to pay government contractors with Bitcoin rather than pay them in USD, further cementing Bitcoin's status as a currency rather than an investment vehicle.  Perhaps this would open the door to treating it more like cash for tax purposes??

If increasing the SBR is their primary motive, they'll still continue to accumulate Bitcoin from fiat tax revenue. I do see large entities indeed competing to increase their Bitcoin on-chain holdings recently. This is in order to realize a society where they own nothing and be happy.
Passing this law isn't a universally win-win solution; it depends on how willing citizens are to pay with it. I just think I'd only give them half the ability to monitor me more intensively than before; once I pay taxes with BTC, my privacy is over. Or I'll have to lie about total of my holdings.

Let me guess where they'll store their SBR : 1CounterpartyXXXXXXXXXXXXXXXUWLpVr.
What will happen when budget deficits, mounting debt, or a consensus vote forces it to be cashed in?

Hmmm interesting. It means if that bill will be passed, US ain't treating bitcoin as only a niche investment, instead of turn it as a true strategic asset and make it clear about Bitcoin's role. However, it can be a bet by the government, and i'm wondering how they will overcome the volatility that may happen to the tax paid in btc.
If the price is appreciating, it's good. However, if it's down, it sounds bad.