Several States Considering Bills to Repeal Taxes on Gold and Silver
Fundamentally, gold and silver are money. But most governments treat precious metals as a commodity. They don’t accept it as payment. Worse than that, they tax it. Think about the absurdity of this policy.
Imagine if you asked a grocery clerk to break a $5 bill and he charged you a 35 cent tax. Silly, right? After all, you were only exchanging one form of money for another. But that’s essentially what state sales and capital gains taxes on gold and silver bullion do. By removing the taxes on the exchange of gold and silver, these states would treat specie more like money instead of a commodity.
In Tennessee, Rep. Ron Gant (R-Rossville) introduced House Bill 212 (HB212) on Jan. 29. Sen. Dolores Gresham (R-Somerville) introduced the companion bill (SB333) the following day. The legislation would exempt the sale of platinum, gold, or silver bullion from the state’s sales and use tax.
A West Virginia bill would go even further. Del. Pat McGeehan (R-Chester) introduced House Bill 2684 (HB2684) on Jan. 25. The legislation would eliminate sales taxes, personal property taxes, and personal and corporate income taxes on gold and silver specie. HB2684 defines “specie” as coin having gold or silver content, or refined gold or silver bullion which is coined, stamped or imprinted with its weight and purity and valued primarily based on its metal content and not its form.
Oklahoma repealed the sales tax on gold and silver back in 2014, but the state still assesses capital gains taxes on precious metals. A bill pending in the state Senate would change that. Sen. Nathan Dahm (R-Broken Arrow) filed Senate Bill 272 (SB272) for introduction on Feb. 4. Under the proposed law, any amount of net capital gains included on a federal income tax return that results from the sale or exchange of gold or silver for another form of legal tender would be exempt from inclusion as taxable income on the state tax return.
Arizona has already taken steps to establish sound money in the state. In 2017, Gov. Doug Ducey signed a bill into law that repealed state capital gains taxes on gold and silver specie. Last year, Rep. Mark Finchem built on that foundation, moving a bill through the legislature that recognizes silver and gold as liquid capital for trust companies.
This year, Finchem (R-Tucson) filed House Bill 2500 (HB2500). Titled the Sound Money Stabilization Act, the legislation would require the state to hold at least 10% of the funds in its Budget Stabilization Fund in specie, or in refined gold or silver bullion graded at least .9999 pure. Specie is defined as coins having precious metals content, or refined gold or silver bullion that is stamped with its weight and purity, and that is valued primarily on its metal content, not its form. The proposed law would require the precious metals to be held in a secure depository.
Arizona’s Budget Stabilization Fund has almost $500 million in assets currently invested in debt instruments and the stock market.
These bills are part of a broader movement as states continue to pass measures that chip away at the Federal Reserve’s monopoly on money by facilitating and encouraging the use of gold and silver. These policies not only ease the burden on precious metals investors, they also open the door to using gold and silver in everyday transactions. This creates currency competition and sets the stage to break the federal government’s monopoly on money.
Former Congressman Ron Paul is a vocal supporter of this movement. He produced a video urging the Wyoming governor to sign a 2018 bill that repealed all taxes on gold and silver. He noted that things move agonizingly slow in Washington D.C. Passing bills like this at the state level are an important step toward real monetary reform.
“It’s just to me sad that we are so far removed from the Constitution. But a little bit here and a little bit there, there is going to be a revolution in monetary policy.”
Paul emphasized that monetary reform is an important step toward reducing the power of the federal government.
“Believe me, the size and scope and interference of government would change a whole lot if we could rein in the monetary system, rein in the Federal Reserve and rein in this spending.”
Paul also testified during in support of a bill to eliminate capital gains taxes on gold and silver that passed in Arizona in 2017.
We ought not to tax money – and that’s a good idea. It makes no sense to tax money.”
The United States Constitution states in Article I, Section 10, “No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts.” States have simply ignored this constitutional provision for years. It’s impossible for a state to return to a constitutional sound money system when it taxes gold and silver as a commodity.
This Wyoming law reestablishes gold and silver as legal tender in the state and takes a step towards that constitutional requirement, ignored for decades in every state. This sets the stage to undermine the monopoly of the federal government by introducing competition into the monetary system.
Constitutional tender expert Professor William Greene said when people in multiple states actually start using gold and silver instead of Federal Reserve Notes, it could create a “reverse Gresham’s effect,” drive out bad money, effectively nullify the Federal Reserve, and end the federal government’s monopoly on money.
“Over time, as residents of the state use both Federal Reserve notes and silver and gold coins, the fact that the coins hold their value more than Federal Reserve notes do will lead to a “reverse Gresham’s Law” effect, where good money (gold and silver coins) will drive out bad money (Federal Reserve notes). As this happens, a cascade of events can begin to occur, including the flow of real wealth toward the state’s treasury, an influx of banking business from outside of the state – as people in other states carry out their desire to bank with sound money – and an eventual outcry against the use of Federal Reserve notes for any transactions.”
Once things get to that point, Federal Reserve notes could become largely unwanted and irrelevant for ordinary people.
Get Peter Schiff’s most important Gold headlines once per week – click here – for a free subscription to his exclusive weekly email updates.
Interested in learning how to buy gold and buy silver?
Call 1-888-GOLD-160 and speak with a Precious Metals Specialist today!