STUMP » Articles » Taxing Tuesday: Not Too Many Interested in Iffy Way to Avoid SALT Cap » 11 December 2018, 05:41

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Taxing Tuesday: Not Too Many Interested in Iffy Way to Avoid SALT Cap  

by

11 December 2018, 05:41

Few N.Y. Businesses Sign Up for State Program to Bypass Trump Tax Limits

New York Gov. Andrew Cuomo said a program enacted in April would help protect employees from new federal limits on the deductibility of state and local taxes.

A state official said 220 businesses had opted into the plan as of Friday, a figure representing less than 0.1% of the state’s employers and an unknown number of employees.

“This is a pretty small share of the employer universe,” said Ken Pokalsky, vice president of the Business Council of New York State, which represents large employers. “Their experience in year one may encourage others to participate, or could illustrate the need to modify the program to promote broader participation.”

….
The Democratic governor has said the federal cap—which his aides estimate will cost 1.7 million taxpayers $14.3 billion—was an “assault” on the state’s economic competitiveness. Those figures don’t account for reduced tax rates, and several studies show the majority of New Yorkers will receive an overall tax cut.

What chaps their asses is that while most people, even in high tax New York, will get some sort of tax cut, there are two results:

  • those getting tax cuts get lesser cuts than lower-tax states (due to the SALT cap)
  • some really, really rich people who are the main sources of state revenue would be the few people to see a federal tax increase

And we can’t be having that.

PAY YOUR BUSINESS TAXES IN BITCOIN

Governing: 1 State and 1 County Now Accept Bitcoin. Will Others Follow?

Governments in the U.S. are starting to accept cryptocurrencies, a controversial method of payment that got its start on the dark web.

SPEED READ:
Ohio last week became the first state where businesses can pay their taxes in bitcoin.
Seminole County, Fla., began accepting bitcoin for some payments this summer.
Bitcoin is the most well-known of cryptocurrencies, which allow users to record data and transactions instantaneously in a way that is mostly unhackable.

To the extent it can work like any other currency, I would think that if the government entities accept foreign currency, I see how this would work.

However.

Bitcoin is not exactly a stable currency.

For both Ohio and Seminole County, accepting bitcoin has two major perks. First, BitPay — much like currency exchange desks — locks in an exchange rate and converts the currency to U.S. dollars. That makes the transaction less risky for governments. After all, it’s been a topsy turvy year so far for bitcoin. The cryptocurrency’s value plummeted 73 percent this year. This week, the currency saw a quick drop, falling more than 6 percent to $3,886 per coin on Monday.

It’s very volatile. I remember talking with one of the Millennials in my office re: Bitcoin… he had been taking a quant finance class, and so applied what he had learned about volatility… and couldn’t believe the numbers he was getting.

I looked at the calculation, and then asked him to just graph the raw data for me. Yes, it has incredibly high volatility.

So any government would want said bitcoin to be exchanged into U.S. dollars ASAP.

Here’s why Bitpay is going along:

Second, bitcoin offers taxpayers an option with a lower fee — 1 percent — than those associated with credit cards, where there’s usually a 2 or 3 percent surcharge for payments to the government. As part of their partnership with BitPay, Ohio and Seminole County lets the company keep the fee as compensation.

But what’s in it for the governments?

Given those features, Ohio Treasurer Josh Mandel hopes accepting bitcoin for 23 business taxes will be particularly appealing to tech startups and international businesses. He eventually wants to expand payments to individual taxes and other types of cryptocurrencies.

Ah. I see now.

By the way, the email I got with this story had a link to this in its ads. Yeah, getting a piece of those transactions could be lucrative for PayPal.

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