The state of Ohio recently decided to allow businesses to pay taxes using cryptocurrencies. However, this move has been criticized as a “PR stunt”, with skeptics describing the move as impractical and unsustainable.
A report by The Detroit Free Press stated that skeptics believed this would be an unsuitable method for tax payment due to the volatile price fluctuations of bitcoin and the lack of mass merchant adoption.
“The Ohio announcement is mainly a PR stunt. There is not a particular advantage in paying your taxes with bitcoin today. The state just wants to signal that it’s ‘cryptocurrency-friend’,” said Kevin Werbach, a professor at the University of Pennsylvania’s Wharton School of Business.
Werback, who taught a course at Wharton called “Blockchain, Cryptocurrency, and Distributed Ledger Technology”, believes that cryptocurrency and blockchain classes should be included in top MBA programs across the country.
Andrew Wu, an assistant professor at the University of Michigan’s Ross School of Business, considered Bitcoin to be an “unattractive” method of payment due to its volatility. Wu noted that while he does not believe that Bitcoin will be able to gain mainstream adoption, he does think it will transform industries.
However, there are supporters of this initiative. Cleveland car dealer Bernie Morena became the first businessperson in the U.S. to pay his company taxes in Bitcoin through the Ohio government portal.
“Digital currency and blockchain are really the next tech revolution,” said Moreno.
A few weeks ago, Ohio partnered with cryptocurrency processor BitPay. BitPay manages payments made in bitcoins and converts them to fiat currency. Ohio’s state treasurer, Josh Mandel, who is a strong believer in Bitcoin as a legitimate form of currency, was the driver of this move.
By accepting Bitcoin as a tax payment, Mandel has set his eyes on attracting blockchain start-ups. He has stated his belief in blockchain’s potential to make payments faster, more secure and less expensive.
Congressman Warren Davidson Warren Davidson even mentioned the potential of cryptocurrency to fund the contentious proposed border wall between the U.S. and Mexico.
“Well, I’ve offered a modest compromise called Buy a Brick, Build a Wall… that we introduced, which lets the American people, or whomever, should choose to donate – Mexican or otherwise – to donate to the program. You could do with this sort of, like, crowdfunding site. Or you could even do blockchain, and you could have wall coins. And frankly, if we get at the Treasury, you could even accept Mexican pesos.”
Meanwhile, the value of bitcoin has gone down from US$20,000 one year ago to $4,000 now. So anyone who decides to pay in bitcoin will need to think carefully about it.
Across the Atlantic, there is also a push for cryptocurrency as a legitimate form of tax payment. Eddie Hughes, a conservative member of parliament, said “You’re either ahead of the curve or you’re behind the curve. We are at a crossroads and we’re about to determine our future – one in which taking the lead in this field could prove very beneficial”.