A United States lawmaker introduced a bill in the House of Representatives on Thursday that would permit Americans to pay their federal taxes using Bitcoin. The proposed legislation, known as the Bitcoin for America Act, would then channel these Bitcoin payments into a newly established US strategic Bitcoin reserve.
The bill, proposed by Representative Warren Davidson, a Republican from Ohio, specifies that any Bitcoin transferred to the US government for tax payments would be exempt from capital gains taxes. This means taxpayers would not incur any tax liability for gains or losses on the Bitcoin used for these payments.
In a press release, Davidson stated, "By allowing taxpayers to pay federal taxes in Bitcoin and having the proceeds placed into the Strategic Bitcoin Reserve, the nation will benefit by having a tangible asset that appreciates over time, unlike the US dollar, which has steadily lost value under inflationary pressures."
This proposal aims to enable the US government to build a strategic Bitcoin reserve without the need to purchase Bitcoin directly from the open market. Such a method would minimize any significant upward pressure on Bitcoin's price that could result from active market buying.
The US Strategic Bitcoin Reserve: Divergent Expectations
While US President Donald Trump signed an executive order in March establishing a strategic Bitcoin reserve, the specifics of this reserve differed from what many Bitcoin proponents anticipated. The executive order did not mandate regular Bitcoin purchases and stipulated that any future additions to the reserve must be financed through budget-neutral strategies.
A primary component of the executive order was the directive that the US government would not sell any Bitcoin acquired through asset seizure and forfeiture.
Following the announcement of this executive order, the price of Bitcoin saw a 6% decline. This market reaction reflected disappointment among Bitcoin enthusiasts who had expected the strategic reserve to grow through consistent market purchases rather than through seized assets.
Journalist and Bitcoin advocate Lola Leetz argued that funding the Bitcoin reserve through forfeited assets creates "perverse" incentives for the government to actively pursue the seizure of Bitcoin to expand the reserve.
Leetz stated, "Civil asset forfeiture should be reformed, not celebrated. If you are cheering this on, you should be ashamed of yourself."
In contrast, Matt Hougan, chief investment officer at investment company Bitwise, offered a different perspective. He suggested that the executive order represented a net positive for Bitcoin.
Hougan explained that the strategic reserve "dramatically" reduces the likelihood of a government ban on Bitcoin and could encourage adoption by other nations seeking to remain competitive on the global stage.