CHEYENNE, Wyo. (Feb. 28, 2018) – Yesterday, the Wyoming Senate passed a bill to exempt cryptocurrency from property taxes. The proposed law would expand the of use digital currency and help undermine the Federal Reserve’s monopoly on money.
A bipartisan coalition of six senators and representatives introduced Senate Bill 111 (SF111) on Feb. 14. The legislation would exempt “virtual currencies” from state property taxes. The bill defines “virtual currencies” as “any type of digital representation of value that is used as a medium of exchange, unit of account or store of value and is not recognized as legal tender by the United States government.”
Passage of SF111 would move toward making virtual currencies, such as Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Litecoin (LTC) and Zcash (ZEC), on par with paper currency, gold, silver, other coins, bank drafts, certified checks and cashiers checks. In other words, the proposed law would treat cryptocurrency like money for tax purposes.
On Feb. 16, the Senate Revenue Committee passed SF111 by a 3-1 vote. On Feb. 21, the Senate Rules Committee approved the measure 5-0. Yesterday, the full Senate passed the bill unanimously, 30-0.
Removing tax penalties for holding or using cryptocurrency would open the door for its broader use. When you tax something, you get less of it. When you remove taxes, you will get more of the activity.
Cryptocurrencies are really nothing more than digital money. We don’t tax money, so there is no reason a state should tax Bitcoin and other virtual currencies.
“We ought not to tax money – and that’s a good idea. It makes no sense to tax money,” former U.S. Rep. Ron Paul said during testimony in support an Arizona bill that repealed capital gains taxes on gold and silver in that state.
Passage of SF111 into law would take an important first step toward generating currency competition. If other forms of money, whether it be cryptocurrencies or gold and silver, gain a foothold in the marketplace against Federal Reserve notes, people will be able to choose them over the central bank’s rapidly-depreciating paper currency. The freedom of choice expanded by SF111would help allow Wyoming residents to secure the purchasing power of their money.
In a paper published at the Mises Institute, Constitutional tender expert Professor William Greene said when people in multiple states start using gold and silver instead of Federal Reserve Notes, it would effectively nullify the Federal Reserve and end the federal government’s monopoly on money.
“Over time, as residents of the state use both Federal Reserve notes and silver and gold coins, the fact that the coins hold their value more than Federal Reserve notes do will lead to a “reverse Gresham’s Law” effect, where good money (gold and silver coins) will drive out bad money (Federal Reserve notes). As this happens, a cascade of events can begin to occur, including the flow of real wealth toward the state’s treasury, an influx of banking business from outside of the state – as people in other states carry out their desire to bank with sound money – and an eventual outcry against the use of Federal Reserve notes for any transactions.”
Once things get to that point, Federal Reserve notes would become largely unwanted and irrelevant for ordinary people.
Cryptocurrencies open up another pathway to this same goal.
SF111 now moves to the House, where it will first need to pass out of the committee process before moving forward.
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