New Hampshire Bill Backs Bitcoin for State Taxes

I grew up in New England, so I can provide a bit of relevant context:<p>New Hampshire is a very quirky state, politically, in a number of ways. In a sense, New Hampshire state government looks a lot more like city-level or county-level government in many other states.<p>Compared to other states, state representatives are far more likely to &quot;average citizens&quot; instead of career politicians - just everyday people who have decided to do as single term in state government, and have little to no plans to run again. This is very frustrating for the leadership of both chambers, since it makes it very difficult to whip votes! On the other hand, it arguably makes it easier for elected officials to buck party lines and vote their conscience, if they so choose.<p>In addition New Hampshire does not (last I checked) have direct-vote ballot initiatives the way California does, but it does make it much easier for citizens to propose legislation. Whether or not this legislation gains traction or actually passes is a separate matter. Look no further than the long history of repeated attempts at marijuana policy reform in NH to see just how difficult it can be to predict which bills will end up gaining traction[0].<p>As a result, it&#x27;s very common to see bills that are proposed and supported by a small contingent of backers, but never end up going anywhere. This bill may or may not end up passing, but just keep this context in mind whenever you read news about a bill being brought to the NH legislature with only a handful of supporters.<p>[0] This issue is actually a particularly fascinating case study in NH government, because NH is a very libertarian-leaning state, and it baffled reform advocates for the longest time that they had such difficulty in getting NH to pass relatively uncontroversial reform measures.

Reminder: New Hampshire Porcupine Festival is one of the best technology events of the year in the USA. Tech talks, hackathons, firing guns w&#x2F; 3D-printed magazines, homeschooling, mesh networking, all sorts of drones &#x2F; FPV vehicles, and on and on. And you can buy just about anything with cryptocurrency, from organic vegetables to an AR-15.<p>If you haven&#x27;t been, it&#x27;s really a must-see phenomenon.<p><a href="http://porcfest.com/" rel="nofollow">http:&#x2F;&#x2F;porcfest.com&#x2F;</a>

Would Bitcoin be stable enough to accept and maintain? Serious question. It seems like the state would have to immediately exchange the Bitcoins for dollars, which costs money and would have a very specific impact on the market (maybe that&#x27;s the point?).

I don&#x27;t see how this doesn&#x27;t cost us money unnecessarily, otherwise I wouldn&#x27;t really care one way or another if we start accepting internet fun bucks.<p>The State is still going to do business in USD; looking at the volatility of USD&#x2F;BTC exchange rate, exchange fees and infrastructure&#x2F;training, I don&#x27;t see how this is anything but a loosing proposition.

It has just been announced that the hearing for this bill will be on February 12, 2015 @ 11:30 AM EST at the NH Legislative Office Building in Room 2002<p>If any of you would like the opportunity to speak on behalf of this bill -- your help would be welcome!

Link to the bill: <a href="https://legiscan.com/NH/text/HB552/2015" rel="nofollow">https:&#x2F;&#x2F;legiscan.com&#x2F;NH&#x2F;text&#x2F;HB552&#x2F;2015</a>

What&#x27;s the benefit? It seems like it would just add more complexity to the tax process and therefore increase the cost of the entire process.

IANAL... is this even legal given that the US Dollar is the only official currency of the United States?

There is a big body of literature demonstrating how the value of money is derived from the state&#x27;s ability to levy and enforce taxes[1]. In fact, this is the basis of most sovereign currency regimes with floating fx. In these regimes, governments issue currency out of thin air and levy taxes to force its ubiquity. However, at the U.S state level(CA,FL,TX,etc) and in the case of the Euro(France,PIGS,etc)at the national level, these entities are constrained by tax revenue and ability to borrow same as a household or business. Thus, instead of bitcoin, which is backed by nothing, why not have states issue their IOU&#x27;s to pay state liabilities but also accept those IOU&#x27;s to retire liabilities to the state. Naturally, this idea is in lieu of federal aid which has been withheld to states because of austerity politics.<p>[1] <a href="http://neweconomicperspectives.org/2011/06/modern-money-theory-primer-on.html" rel="nofollow">http:&#x2F;&#x2F;neweconomicperspectives.org&#x2F;2011&#x2F;06&#x2F;modern-money-theo...</a>

It&#x27;s probably a bit too soon for something like &quot;pay my taxes in bitcoin&quot;... but ultimately a government transacting in a transparent fashion such as this _MUST_ be a step in the right direction? No?

Someone could create a POS machine that rendered taxes directly to the state at the time of sale or in batches. Also people could discover a company&#x27;s sales figures by watching the blockchain.

Can state taxes currently be pain in New Hampshire with anything other than USD?

The right way to do it, as far as I can see, is to allow people to report their taxes in whichever form of money they prefer. US Dollars, Euros, gold would all be a valid numeraire to use when reporting your current assets and income to the IRS. And the currency you choose to report your taxes in, is the currency you pay taxes in.<p>This is just currency competition. Nothing more than that. The ability to freely choose which currency you want to use to measure value.<p>Whether bitcoin should be considered alongside dollars, yen and silver is an open question. If people are allowed to report their taxes in bitcoins, they can really shoot themselves in the foot. But, personally, I&#x27;m generally speaking not in favor of the government preventing people from shooting themselves in the foot.<p>Say, for example, I choose to report my taxes in bitcoins. I currently hold 10 bitcoins and $1,000. Later, the price of bitcoins in dollars (BTCUSD) falls from 225 to 50. This means that one dollar is now worth 1&#x2F;50 bitcoin instead of 1&#x2F;225 bitcoin. I then buy 20 bitcoins using the $1,000, and -- because I report my taxes in bitcoins -- it means I&#x27;ve realized a capital gain of ($1,000×(1&#x2F;50) - $1,000×(1&#x2F;225)) = 20 BTC - 4.4444 BTC = 15.5556 BTC, on which I pay capital gains tax. The <i>bitcoin value</i> of my dollars has increased (before 1&#x2F;225 bitcoin per dollar, now 1&#x2F;50 bitcoin per dollar), so I have to pay bitcoins to the IRS if I convert dollars into bitcoins, after the bitcoin price falls.<p>This just shows that bitcoin really isn&#x27;t ready to be used as proper money. Proper money is a money you would report your taxes in. Bitcoin just isn&#x27;t stable enough in value yet.