Congressman Introduces Bill Allowing Federal Income Taxes To Be Paid In Bitcoin

Recently, Congressman Matt Gaetz has introduced a bill to allow federal tax payments in Bitcoin. The bill aims to make Bitcoin a legitimate payment method for taxes, right next to the US dollar.

A new bill has been introduced in Congress that would allow federal income taxes to be paid in Bitcoin. The bill, if passed, would amend the Internal Revenue Code of 1986 to include Bitcoin as a valid payment method.

Congressman Matt Gaetz (R-FL) introduced the bill, which aims to make Bitcoin a legitimate option for paying taxes, alongside the US dollar. The bill would pave the way for taxpayers to use their cryptocurrency holdings to settle their tax obligations.

However, there are potential risks involved in paying taxes with Bitcoin. As we can observe from the Bitcoin price chart below, BTC tends to appreciate in value over time.

Even though one Bitcoin is currently trading at around $60,000 at the time of this writing, that amount has increased significantly since last year. So, it might not be the best idea to use something that is increasing in value to pay your income taxes.

Furthermore, if we take a look at the purchasing power of the US dollar chart above, we can see that it has been continuously decreasing, which is caused by inflation and other macroeconomic factors that affect the fiat currency.

There’s also a backlash brewing over the bill because it would require taxpayers to pay a service fee to use Bitcoin, similar to the fee charged if you use your credit card to pay your tax debt.

Privacy concerns are also being raised, as the Bitcoin network is very public and open-source, allowing anyone to view transactions on the blockchain.

With the help of a few blockchain analytics tools, it's possible to determine who is paying what, despite the pseudonymous nature of Bitcoin addresses.

The bill, according to an excerpt from a Decrypt article, "addresses liability and confidentiality issues, applying rules similar to those currently in place for other payment methods, ensuring that the introduction of Bitcoin as a payment option does not compromise existing taxpayer protections."

Congressman Gaetz, in his own words, is a "Bitcoin maximalist" who believes that the cryptocurrency should be integrated into the US financial system.

He claims that the bill is a response to the Biden administration's alleged hostility toward Bitcoin and other cryptocurrencies.

"This bill would ensure that the government can’t discriminate against Bitcoin and that it must be treated equally to fiat currency, like the dollar, for the purposes of paying taxes," Gaetz said.

"The IRS has the capability to accept Bitcoin payments today, but the left is intentionally blocking this common-sense financial innovation to the detriment of American taxpayers."

The bill is unlikely to gain traction in the Democrat-controlled Congress, but it does highlight the growing interest in cryptocurrency among lawmakers and the public.

As we move forward, we can expect to see more legislative proposals related to digital assets.

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