If the bill passes the legislature, Arizona voters would decide whether virtual money is tax-exempt as part of a ballot question in November 2024.
The Arizona State Senate is debating a plan that would allow voters to decide whether virtual currency should be exempt from property taxation.
Senators Wendy Rogers, Sonny Borrelli, and Justine Wadsack suggested altering the state constitution regarding property taxes in legislation submitted in the first session of the Arizona State Senate in 2023. If the bill passes the legislature, voters in November 2024 will have the option of making virtual currency — especially tokens that are not “a representation of the United States dollar or a foreign currency” — tax-free.
All federal, state, county, and municipal property, as well as public debts, numerous home commodities, and certain “stocks of raw or completed materials, unassembled parts, works in process, or finished products,” are tax-exempt under Arizona’s constitution. According to data from the Arizona Secretary of State, there will be over 4 million registered voters in the November 2022 general election, with the state leaning slightly Republican.
SCR 1007 was given two readings as part of the state Senate’s schedule on January 19 and January 23. Previously, lawmakers attempted to move forward on crypto and tax legislation, such as a 2018 bill that would have allowed citizens to submit tax payments in cryptocurrency, but then-Governor Doug Ducey vetoed it. In the second Senate session of 2022, Rogers introduced a bill similar to SCR 1007.
However, the proposed legislation would encounter a different political context than in 2018 or even 2022, with Republicans Rogers, Borrelli, and Wadsack having either dismissed or questioned the fair and lawful election of several state and federal lawmakers. In the 2022 midterm elections, Democrat Katie Hobbs narrowly defeated Republican Kari Lake to become governor of Arizona.
In the United States, sales or purchases of cryptocurrencies are normally subject to capital gains taxes. Colorado Governor Jared Polis advocated enabling residents to pay taxes in cryptocurrency, and Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming offered 0% capital gains tax to potential investors.