Several States Looking to Repeal Taxes on Gold and Silver
Bills are moving forward in several states that would support gold and silver and ultimately help undermine the Federal Reserves monopoly on money.
Legislation that would eliminate state capital gains taxes on gold and silver specie is sitting on Arizona Gov. Doug Ducey’s desk waiting for his action.
Rep. Mark Finchem (R-Tucson) introduced HB2014 earlier this year. The legislation would eliminate state capital gains taxes on income “derived from the exchange of one kind of legal tender for another kind of legal tender.” The bill defines legal tender as “a medium of exchange, including specie, that is authorized by the United States Constitution or Congress for the payment of debts, public charges, taxes and dues.” “Specie” means coins having precious metal content.
In effect, passage into law would “legalize the Constitution” by treating gold and silver specie as money.
HB2014 has passed both houses of the Arizona legislature. Gov. Ducey has until May 22 to sign or veto the bill. Last year, he vetoed similar legislation. If you live in Arizona, click here for some specific actions you can take to support this bill.
Former US congressman Ron Paul traveled to Arizona and testified during a committee hearing in support of the legislation in March.
We ought not to tax money – and that’s a good idea. It makes no sense to tax money. Paper is not money, it’s fraud.”
You can watch Paul’s full testimony in the video below.
The bill’s impact goes beyond mere tax policy. During an event after his Senate committee testimony, Paul pointed out that it’s really about the size and scope of government.
If you’re for less government, you want sound money. The people who want big government, they don’t want sound money. They want to deceive you and commit fraud. They want to print the money. They want a monopoly. They want to get you conditioned, as our schools have conditioned us, to the point where deficits don’t matter.”
AN IMPORTANT STEP FORWARD
Passage of HB2014 would remove the amount of any net capital gain derived from the exchange of one kind of legal tender for another kind of legal tender or specie (gold and silver coins) from their gross income on their state income tax. In other words, individuals buying gold or silver bullion, or utilizing gold and silver in a transaction, would no longer be subject to state taxes on the exchange.
“What the IRS has figured out at the federal level is to target inflation as a gain. They call it capital gains,” Finchem said during a committee hearing. He noted that the bill would help Arizona residents “protect their conversion of one kind of currency for another.”
Passage into law would mark an important step towards currency competition. If sound money gains a foothold in the marketplace against Federal Reserve notes, the people would be able to choose the time-tested stability of gold and silver over the central bank’s rapidly-depreciating paper currency. The freedom of choice expanded by HB2014 would allow Arizona residents to secure the purchasing power of their money.
Arizona is not the only state looking to free gold and silver from the shackles of taxation. Bills to repeal sales taxes on gold and silver moved out of committee in both North Carolina and Louisiana recently.
Rep. Stephen Dwight (R) and Rep. Mark Abraham (R) sponsor House Bill 396 (HB396) in Louisiana. The legislation would exempt the sale of platinum, gold, or silver bullion, ingots, or coins from the state sales tax. It would also exempt certain numismatic (collectable) coins. The House Committee on Ways and Means passed HB396 by a 12-0 vote earlier this week.
In North Carolina, Rep. Dana Bumgardner (R-Gastonia) and Rep. Jeff Collins (R-Rocky Mount) sponsor House Bill 434 (H434). The legislation would exempt investment metal bullion, investment coins and non-coin currency from state sales tax. The bill defines bullion as “Any elementary precious metal that has 12 been put through a process of smelting or refining and that is in such 13 state or condition that its value depends upon its content and not upon its form.” On Tuesday, H434 was reported favorable out of the House Committee on Finance.
In Texas, a state bullion depository is moving closer to reality. The facility will not only provide a secure place for individuals, business, cities, counties, government agencies, and even other countries to to store gold and other precious metals, the law also creates a mechanism to facilitate the everyday use of gold and silver in business transactions. People will be able to deposit gold or silver – and pay other people through electronic means or checks – in sound 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 states to return to a constitutional sound money system when it taxes gold and silver as a commodity.
These state-level actions take a step towards that constitutional requirement, ignored for decades in every state. Such a tactic would set the stage to undermine the monopoly of the Federal Reserve 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 would 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 would become largely unwanted and irrelevant for ordinary people. Nullifying the Fed on a state by state level is what will get us there.
The Tenth Amendment Center contributed to this report.
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