PHOENIX, Ariz. (Feb 22, 2016) – An Arizona bill that would “legalize the Constitution” by defining gold and silver coins as money and removing a barrier to their use as currency passed the state Senate last week.
Sen. David C. Farnsworth and Rep. John Allen, along with eight cosponsors introduced Senate Bill 1423 (SB1423) on Feb. 1. The legislation defines gold and silver coins as money and repeals all state taxes on their exchange.
“Notwithstanding any other law, the exchange of gold or silver coins does not give rise to liability for any type of tax. Gold and silver coins are money and are not subject to taxation except as may be required by article IX, section 2, subsection 13, constitution of Arizona.”
The measure passed the Senate by a 17-12 vote.
Thirty other states have already eliminated capital gains tax on the sale of gold and silver coins.
A second bill (SB1141) that would broaden the definition of “legal tender” beyond only Federal Reserve Notes and further encourage the use of precious metals as currency is still waiting for a vote in the Senate.
STEP FORWARD
Working together, the legislation would also allow Arizonans to deduct the amount of any net capital gain included in federal adjusted gross income derived from the exchange of one kind of legal tender for another kind of legal tender or specie from their state income tax, In other words, individuals buying gold or silver, or utilizing gold and silver in a transaction, would no longer be subject to state taxes on the exchange.
Passage of both bills 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 SB1141 and SB1423 would allow Arizona residents to secure the purchasing power of their money.
“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,” Tenth Amendment Center executive director Michael Boldin said. “This is an important part of the overall strategy, and activists in Arizona should continue working to get both bills passed.”
BACKGROUND INFORMATION
Currently, all debts and taxes in Arizona must be paid with either Federal Reserve Notes (dollars), authorized as legal tender by Congress, or with coins issued by the U.S. Treasury — very few of which have gold or silver in them.
But 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.”
The Arizona bills take a step towards that constitutional requirement, ignored for decades in every state. Such a tactic would undermine the monopoly or the Federal Reserve by introducing competition into the monetary system.
Professor William Greene is an expert on constitutional tender and 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.
NEXT
SB1423 will move on to the House for further consideration.
In Arizona, take action to pass these bills at THIS LINK.
- Arkansas House Committee Advances Bill to Prohibit Credit Card Codes to Track Firearms Purchases - March 14, 2025
- To the Governor: Idaho Passes Bill to Recognize Gold and Silver as Legal Tender - March 13, 2025
- Senate Committee Holds Hearing on Missouri “Constitutional Money Act” to Recognize Gold and Silver as Legal Tender - March 12, 2025