Ohio recently became the first U.S. State to accept Bitcoin for 23 different forms of business taxes. Some observers think it’s a stunt. Others think it’s not only cool, but also a way for businesses to save on fees when paying their taxes.
Observers React to Ohio’s Acceptance of Bitcoin for Tax Payments
After Ohio announced its plan to accept Bitcoin for business tax payments, some industry insiders may have cheered because it meant the asset could be gaining traction as a “legitimate” form of payment. Car dealership owner Bernie Moreno promptly bought BTC to pay for some taxes related to car leases, for instance, because he wanted to be seen as one of the first businessmen to actually pay taxes via crypto.
He may have also wanted to take advantage of the three-month window in which no fees will be charged for paying taxes in BTC. After the three-month window closes, the fees will move to one percent. That is still lower than the fees that Ohio charges to pay taxes with a credit card.
“Digital currency and blockchain are really the next tech revolution,” Moreno told reporters.
Other commentators said that Ohio’s new medium for paying taxes is a gimmick, subsequently comparing the offering to Beanie Babies. Most businesses still don’t accept cryptocurrencies, so they might not be very inclined to buy BTC for the purpose of paying taxes. Naysayers also say that Bitcoin’s price is still very volatile, which makes it unsuitable for paying bills.
“The Ohio announcement is mainly a PR stunt,” said Kevin Werbach, professor of legal studies and business ethics at the Wharton School of the University of Pennsylvania.
What The Naysayers Get Wrong
The naysayers tend to ignore the fact that many crypto insiders, especially those who have been around for a while, still like cryptocurrencies as a way to make transactions without compromising their sensitive personal data.
Many of the same proponents may be tired of having to establish their identities on exchanges, and may actually want to use their holdings as bonafide currency. Although Ohio does demand that businesses have a profile on file with the treasurer’s office for security purposes, paying taxes with Bitcoin could be just one more way in which owners can use crypto in their day-to-day without having to liquidate it.
When business see that they can not only pay taxes with crypto but also save money while doing so, they may also be more inclined to accept cryptocurrency payments rather than deal with the exchanges and the fees entailed.
They may also demand access to services similar to Living Room of Satoshi, in which people can pay their “overhead” expenses, such as rent and utilities, via crypto. That way, businesses can worry less about the volatility that comes with “HODLing” cryptocurrencies and simply make it part of their daily and monthly operations.
Ohio’s acceptance of Bitcoin for business taxes might be a PR stunt like Werbach said. However, some businesses like Moreno’s car dealership seem genuinely interested in actually using cryptocurrencies to cover at least part of the cost of doing business, including the payment of taxes.
This may spur greater adoption and help steer cryptocurrencies away from their current perception that they are purely a means of speculation that is too volatile to be useful in everyday life.