A bill that would have shielded Alabamians’ cryptocurrencies failed to pass the Alabama House of Representatives on Thursday. House Bill 372 was sponsored by state Rep. Andrew Sorrell, R-Muscle Shoals.
Under current Alabama law, Alabamians do not pay ad valorem (property) taxes on a number of asset classes. These include financial assets: cash, bonds, and stocks; but also includes cotton, family portraits, livestock (including horses and mules), agricultural commodities grown in Alabama, tractors and farm equipment, coke, pig iron, industrial goods owned by a factory produced in Alabama in the last twelve months, tools, family provisions, clothes, religious books, library books, and the first $12,000 of property owned by a blind person or $3,000 in assets of an insane person or an “incompetent veteran”.
HB372 would have formally added cryptocurrencies, digital currencies, to that list of assets that are shielded from paying ad valorem taxes.
While the U.S. dollar remains the world’s reserve currency; it is not backed by gold, silver, land, or anything of any intrinsic value. The United States government has not produced a balanced budget in over 30 years. Income taxes, corporate taxes, payroll taxes, tariffs, rents on federal lands, oil and gas leasing, fines and fees, etc. only brought in $3.3 trillion in 2016. The U.S. spent almost $3.8 trillion. The budget deficit, even in a “good year” was $506 billion. This was paid for by deficit spending and artificially increasing the money supply. Federal spending in 2020 soared as the federal government tried to shield as many people as possible from the worst economic effects of the global COVID-19 pandemic. The U.S. debt meanwhile has soared from $19.4 trillion in 2016 to $28 trillion today. All of this tends to be inflationary.
“The dollar has lost 99 percent of its value since 1913,” explained Sorrell.
Since the U.S. government is sitting on a mountain of debt, and because it is viewed as good public policy to allow as many Americans as possible to own homes, start businesses, or borrow money for college; the federal government has been artificially keeping interest rates as low as possible. The ten year U.S. Treasury note is currently paying just 1.6 percent return. Inflation for 2021 is growing at an annualized rate of 1.7 percent; but it was 2.3 percent in 2019 (pre-pandemic). Since interest rates are usually at or below the ten-year treasury, this means that money in a traditional bank savings account is typically losing buying power even as it accumulates interest. For this reason, and due to the growing possibility that we could see higher inflation in the future means that many people and corporations have converted a portion of their savings into cryptocurrencies as both a hedge again further erosion in the dollar as well as for speculation.
The largest and most accepted of these new digital currencies is bitcoin.
“Bitcoin was started by Satoshi Nakamoto in 2008,” Sorrell explained. “You can buy bitcoin on Paypal, CashApp, or even use it to buy your new Tesla! Elon Musk and Tesla have purchased $1.5 billion worth of bitcoin, and software company MicroStrategy has bitcoin holding in excess of $5 billion.”
Sorrell, a pawnshop and gun store owner, said that his business will accept cash, bitcoin, gold, silver, and even trades as the customer prefers.
The amount of money that is currently is parked in bitcoin is in excess of $1 trillion. The top ten of these new digital currencies are: bitcoin with a market cap of $1,044 billion, Ethereum $208 billion, Binance $39.6 billion, Tether $38.6 billion, Cardano $33.5 billion, Polkadot $31.8 billion, XRP $21.8 billion, Uniswap $15.3 billion, Litecoin $13.6 billion, and Chainlink $11.6 billion. By comparison the Alabama House just passed the largest state general fund budget in state history and it was $2.4 billion.
Sorrell said that it was important to…
Read More:Bill to exempt cryptocurrencies from ad valorem taxes stalls in the Alabama
