USA: Bill on tax payments in Bitcoin presented at federal level

Republican Congressman Matt Gaetz, has introduced a bill that would allow citizens to pay state income taxes in Bitcoin. Should the legislation pass, the Treasury Department would be directed to develop a plan for accepting BTC for tax payments.

The Department of Revenue shall develop and implement a method that allows for the payment of taxes imposed on an individual pursuant to this title using Bitcoin.
_{From the bill}

Matt Gaetz wants the Treasury Department to accept federal income taxes in Bitcoin - without using financial intermediaries. According to Gaetz, this should drive innovation and efficiency in the USA and ensure that the USA continues to play a leading role in technological progress. In addition, the Bitcoin option for tax payments would offer citizens more flexibility, explains the Republican.

By allowing taxpayers to use Bitcoin for federal tax payments, we can encourage innovation, increase efficiency, and provide more flexibility for American citizens. This is a bold step toward a future where digital currencies play an important role in our financial system and where we ensure the U.S. remains at the forefront of technological advancement.
_{Matt Gaetz}

According to the associated press release, the bill was triggered by Matt Gaetz's trip to the "Bitcoin nation" of El Salvador for the second inauguration of President Nayib Bukele.

There, he witnessed how Bitcoin, the world's most popular decentralized digital currency, has helped promote financial stability and job creation in Central America after El Salvador became the first country to adopt Bitcoin as legal tender in 2021. Following the success El Salvador has had with Bitcoin and the recent boom in cryptocurrencies, Congressman Gaetz has introduced legislation that would allow taxpayers to pay their federal income taxes with Bitcoin.
_{From the press release}

One reason people demand the otherwise worthless government currencies in the first place is that they are generally forced to pay their taxes in them. In the USA, taxes are levied at federal level, but the individual states also levy their own taxes. Citizens in Colorado are already able to pay taxes at state level in Bitcoin. Utah, New Jersey and Kentucky have also taken steps in this direction.

Matt Gaetz is an ally of presidential candidate Donald Trump, who is focusing on Bitcoin and cryptocurrencies in his election campaign. Trump is already accepting BTC and other cryptocurrencies for campaign donations and would like to support the industry - especially Bitcoin mining - as president.

It remains to be seen whether other politicians will support Gaetz's bill and whether it will one day be possible to pay taxes in Bitcoin at federal level in the US. In Germany, the federal government categorically ruled out this option in its response to the AfD's minor interpellation on Bitcoin.

The political environment in the USA appears to be more open to Bitcoin and new approaches in general. Just a few weeks ago, Republican Congressman Thomas Massie submitted a bill to abolish the Federal Reserve. Massie then explained in an interview that the book "The Bitcoin Standard" had prompted him to do so.

Although it is unlikely that the US central bank will be abolished in the foreseeable future, nor that Bitcoin will be accepted for taxes at federal level, bills such as these are sparking debate and bringing Bitcoin further into the spotlight. Whether the strong pro-Bitcoin stance of some Republicans will also manifest itself in more Bitcoin-friendly legislation in the future remains to be seen.