The way of taxation in the US state of Colorado is already different from what we are used to in Europe. For example, residents can pay taxes with their credit cards. But now it gets even more interesting: residents can also pay with crypto.
It involves all kinds of taxes, including income tax and business income tax. The move to enable taxation in crypto is a way to normalize crypto in the state. Colorado's governor ahs on many occasions stated that he wants to make his state the center of the U.S. crypto industry.
Cooperation with PayPal
To make the payments possible, Colorado has teamed up with the crypto branch of PayPal. Using PayPal means that paying taxes with crypto comes with transaction fees: 1.83% of the total.
No list of crypto accepted has been disclosed. It is known, however, that PayPal accepts the following crypto:
- Bitcoin Cash
Colorado crypto state
Of course, Colorado as a state is on a dollar standard, the governor acknowledges:
“Our budget is still in dollars, our expenditures are still in dollars, and, of course, we don’t want to take the speculative risk of holding crypto, so we will be having a transactional layer there. It will be entering our systems as dollars."
So, the option to pay with crypto in Colorado seems to be mostly a signal: crypto is being taken seriously here. Whether people will start using it on any meaningful scale, of course, remains to be seen. First, many people are not very familiar with crypto. And second, PayPal charges a transaction fee, while a regular bank transfer is free. But it is a nice piece of good news at a time when there are also many headwinds from authorities.