Colorado today made a big move, becoming the first state to accept Bitcoin as a form of payment for taxes.
36.8 billion dollars was Colorado’s state budget in 2021.
32.4 billion was state revenue in 2019, which some numbers for 2021 are being accounted for, but it’s pretty proportionate to 2019 numbers.
Which Colorado has a pretty unique tax structure compared to most states in how they collect revenue.
Where most states in the US have property taxes as the primary income tax source, Colorado has only a .4% rate, putting it as one of the lowest taxed states on property. Income though, they are higher, with a 4.6% state income tax, which brings in over 65% of tax revenue.
Colorado also capitalized early on with marijuana, where marijuana in 2021 brought in 423 million dollars in tax revenue, which writing, I really wish was 3 million less for humor.
Colorado accepting bitcoin for tax revenue is actually a pretty big deal and I’m writing this as someone who thinks most crypto are a total scam.
The reason it’s important is this.
29.4 billion dollars was how much VC money went into crypto in 2021.
Just for a comparison on that, venture capital in startup or early phased companies in Colorado hit 6.9 billion dollars in 2021. Which is growing, with that number being 2.5 billion in 2019.
Colorado has gotten more tech heavy, with Palantir relocating there, along with companies such as Facebook, Salesforce and more setting up offices.
The governor, Jared Polis is also more pro tech, publicly asking Elon Musk to relocate Tesla to Colorado on Twitter and has the biggest tech background of anyone in politics personally, founding Techstars and several companies to do centi million dollar buyouts.
This makes a pretty strong case for allowing taxes to be paid in bitcoin, because it’s good marketing for that industry to incorporate there, even if many of the companies could be scam rich or have problems down the road.
The other truth is it won’t impact revenue at all.
Colorado can easily make a deal with companies that’ll convert the bitcoin they receive into cash. Bitcoin also likely won’t be that huge part of revenue, where they count capital gains returns as income taxes, but the exemptions are fairly large and today not even 1% of revenue for the state.
This means they’ll be a pretty small tax issue, if any, but Colorado in sheer marketing makes itself look better to a tech industry getting increasingly annoyed by Colorado.