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US Citizens May Pay Taxes in Bitcoin Soon with New Bill

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By Olumide Akinlaja - - 5 Mins Read
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Florida Congressman Matt Gaetz has sponsored a ground-breaking legislative proposal that would let citizens pay their federal taxes using Bitcoin. Introduced to the house on June 25, 2024, this proposal aims to update the American tax system and improve technology. Should the bill be approved, it will position the United States as a leader in financial innovation in accordance with the global drive towards digital currencies.

The bill by Republican Representative Matt Gaetz, attempts to change the Internal Revenue Code of 1986. It requires the U.S. Treasury Secretary to create a program that permits federal taxes to be paid using Bitcoin. This is part of a larger project aimed at including digital currencies in the American financial system. According to Gaetz, “By enabling taxpayers to use Bitcoin for federal tax payments, we can promote innovation, increase efficiency, and offer more flexibility to American citizens. This is a bold step toward a future where digital currencies play a vital role in our financial system.”

Gaetz’s bill followed the first official recognition of Bitcoin as legal currency as proclaimed by El Salvador's President Nayib Bukele. El Salvador has kept its Bitcoin policy in face of criticism from the International Monetary Fund and other international organizations, and the country has enjoyed rather significant economic progress as a result. Gaetz believes that if the US embraces digital currency, it may enjoy similar economic growth.

Legislative Landscape and Broader Implications

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Gaetz's proposition comes at a time when the U.S. is seeing a rising governmental embrace of cryptocurrencies but it has also sparked diverse opinions. Advocates contend that the bill will simplify the tax-paying process and encourage tech-savvy Americans to embrace the taxation system. Critics, however, voice worries about Bitcoin's volatility and how it might affect tax income stability.

Although observers think many legislators have a progressive posture, the bill has great difficulty attracting bipartisan support. Still, the bill conforms with existing legislative initiatives aimed at controlling and including digital currencies in the banking system. For example, the House passed the Financial Innovation and Technology for the 21st Century Act (FIT21), which divides regulatory duties between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), simplifying crypto control.

Senators from both the Republican and Democratic parties are also working on stablecoin bills that would allow banks and other financial institutions to issue U.S. dollar-pegged tokens. Key figures in these efforts include Senators Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY), along with Representatives Patrick McHenry (R-NC) and Maxine Waters (D-CA).

The Path Forward

Although Gaetz's bill is still in its early stages, its introduction has spurred debates about the future role digital currencies will play in the American financial system. Should the legislation be approved, it might establish a model for other nations and governments contemplating such policies.

Including Bitcoin in the tax code would provide Americans with greater freedom and maybe cut transaction expenses. Furthermore, this action might strengthen America’s position and leadership in technology innovation, therefore promoting a more inclusive and forward-looking economic climate. Adopting cryptocurrencies like Bitcoin could prove crucial for preserving global competitiveness as the world turns to digital solutions more and more.

Resources:

  1. https://gaetz.house.gov/media/in-the-news/florida-lawmaker-pitches-bitcoin-taxes-bill
  2. https://cryptoslate.com/president-bukele-champions-el-salvadors-multiple-bitcoin-revenue-streams/
  3. https://www.reuters.com/markets/us/stablecoins-face-bank-like-us-regulation-under-draft-house-bill-source-2022-07-20/
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