The bad news: A study released today by WalletHub
ranked Illinois the worst in the nation in taxes. The good news? Soon you may be able to pay your sky-high tax bill with Bitcoin.
Last month state representative Michael J. Zalewski introduced Illinois House Bill 5335
—a proposal that would allow the state to accept payments for taxes in cryptocurrency. The bill states that the Department of Revenue would convert such payments to dollars "within 24 hours after receipt of the payment and shall credit the taxpayer's account with the converted dollar amount."
Zalewski says he introduced the bill—assigned to the Revenue & Finance Committee as of March 5—because there's "real potential" for digital currency and the blockchain technology that serves as its public transaction ledger to improve the state's financial transactions.
"If it's applied correctly, there's potential here for our government to run more efficiently, more transparently, and faster," says Zalewski, whose 23rd District covers a portion of south-suburban Cook County. "Particularly with tax payments it would be valuable to see the moment where taxes paid and a log of the transaction from point A to point B. It could lead to some better outcomes."
How exactly such a program would be implemented remains a bit of a mystery. Rumi Morales, an advisory member of the Chamber of Digital Commerce, a D.C.-based trade association representing the blockchain industry, says she likes the bill's spirit but finds the current language lacking.
“As I read it, they want payment via cryptocurrencies, but digital tokens are created, like, everyday and there are something like 4,000 of them at this point,” says Morales. “Would Illinois accept those or just more established ones?
“I’m wholly supportive of what Illinois is doing so far now as supporting blockchain and cryptocurrencies—it’s attracting jobs and talent, and it’s the wave of the future," she added. "But this bill needs more specifics.”
Zalewski admitted that the bill is a work in progress.
"We have plenty of work to do on the bill, that's why it's filed as a discussion topic. We're at the spear tip of technology here," he said.
Illinois's "Bitcoin Bill" was inspired by a similar bill submitted to the Arizona state senate in January and Georgia's senate a month later. It was also proposed in New Hampshire in 2016, but that proposal failed due to concerns that the volatile nature of the cryptocurrency market could complicate the state's ability to receive a payment.
During testimony regarding that bill, New Hampshire Liberty Party cofounder Darryl Perry questioned why the government would accept cryptocurrencies for payment and not precious metals like silver and gold. "Where does this end? Will we go down this slippery slope to any thing of value, and then could I take a carton of eggs and pay my $5 parking ticket?" he said
Cryptocurrency is very different than a traditional barter system, however—especially considering there are no physical objects involved. The "coin" part of bitcoin exists only online. It was created in 2009 by a mysterious figure using the alias Satoshi Nakamoto. Initially it had very little value—Bitcoin developer Laszlo Hanyecz famously bought two Domino's pizzas with 10,000 Bitcoin back in 2010.
Eight years later, Bitcoin has skyrocketed in value, and most Illinoisans would be able to pay their entire tax bill with a single coin. At the current exchange rate one Bitcoin equals $9,239—more than enough to pay off the $8,299 in annual and state and local taxes (including a whopping $4,288 in property taxes) the average Illinois resident pays.
Bitcoin remains the grandfather of cryptocurrencies with about a third of the $710 billion market, according to tracker CoinMarketCap.com, but there are about 40 other "alt-coins" worth $1 billion each. That includes Dogecoin, the dog-meme-themed cryptocurrency introduced as a joke in 2013 that's now valued at $1.7 billion.