State Deals Blow to Federal Reserve, House Passes Bill To Treat Silver and Gold as Money … As central economic planners at the Federal Reserve continue their vision of “prosperity” through crushing debt and dollar devaluation, some states are fighting back. The Arizona House took a major step toward sound money by passing a bill to eliminate penalties in the form of taxes on gold and silver specie. The move would be an important step toward currency competition and help undermine the Fed’s monopoly on money.
The Arizona House has removed a gold and silver inflationary tax. Meanwhile Utah and Oklahoma have declared gold and silver legal tender in their state, free from any taxation. Other states are mulling similar moves. It is a ways from being a major movement but the moves are “critical in dispensing with the idea that gold and silver are merely investments and speculation.”
Several other rules exist around the country that provide further disincentive for sound money through specie. As the Tenth Amendment Center points out, dealers who buy gold and silver from the public are required to collect personal information from sellers and upload this information daily into law enforcement databases. Some dealers are barred from selling gold and silver to anyone for seven days, forcing them to tie up large amounts of capital and absorb market risk.
“Rep. Mark Finchem (R-Tucson) introduced House Bill 2014 (HB2014) on Jan. 9. 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.
HB2014 was passed by a 35-24 vote.” Capital gains tax on gold and silver is especially misleading. It is more likely a tax on inflation than on the underlying metals. “This bill is an effort by one state to protect the people from such confiscation,” said Representative Finchem.
With this bill, the inflationary tax can be deducted from gross income on their state income tax. The bill now goes to the Senate.
Finchem argues that any perceived capital gain from gold and silver is not actually a gain, but a protection against losing money in the inflationary federal reserve system.
“It’s called inflation,” Finchem continued. “The Internal Revenue Service for many, many years has been taxing inflation as though it was a gain.”
The idea is that if more states can remove unjust taxation real currency competition will be in a position to return. “This isn’t going to end the fed’s monetary monopoly overnight, but it sets the foundation and opens the door for more market activity by the people,” Michael Boldin of the Tenth Amendment Center reportedly said. “
Forces at the state and federal level will want to kill the bill even before the Senate votes on it. But William Greene, professor of economics at New York University is quoted as saying:
“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.”
Conclusion: The path back to real money is a slow one but states are embarking on it now. And as they continue, silver and gold are gradually seen as money again. That’s real progress.