Last month, a reporter with the Anniston Star in Alabama interviewed me about a bill prefiled in the Alabama House for 2018 that would exempt the purchase of gold and silver bullion from state sales and use tax, encouraging its use and taking the first step toward breaking the Federal Reserve’s monopoly on money.
I could tell from the reporter’s questions that he was trying to figure out where Rep. Ronald Johnson (R-Sylacauga) got the idea for the bill. He thought maybe it was based on Tenth Amendment Center model legislation. I told him we had not directly communicated with Johnson, although we have been involved in the process in other states. There were a number of states that have considered similar bills in the last two years, and this type of legislation passed in North Carolina and Louisiana during the last session. Legislators often communicate with colleagues in other states, and when bills pass in several states, they often get copied in others.
The interview provided me an opportunity to inject TAC talking points into the article.
It’s unclear why Rep. Ron Johnson, R-Sylacauga, wants to remove the tax on coins — attempts to reach over the last week were unsuccessful — but the move is winning praise from people who’d like to see the country return to the gold standard. “I think it would be a first step in that direction,” said Mike Maharrey a spokesman for the Tenth Amendment Center.
The center, a group that advocates for state “nullification” of various federal laws, was one of the few organizations that took note in February when another lawmaker, Rep. Lynn Greer, R-Rogersville, filed a similar bill to remove the state’s sales tax on coins made of precious metal. Maharrey at the time said the bill was a step toward “currency competition” that would allow gold and silver coins to compete with government-authorized money in the marketplace.
House Bill 19 (HB19) would exempt the gross proceeds from the sale of gold, silver, platinum, and palladium bullion and coins from sales and use tax in the state.
During the interview, I explained to the reporter why taxing gold and silver bullion is silly using the following analogy.
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 Alabama’s sales tax on gold and silver bullion does. By removing the sales tax on the exchange of gold and silver, Alabama would treat specie as money instead of a commodity. This represents a small step toward reestablishing gold and silver as legal tender and breaking down the Fed’s monopoly on money.
Practically speaking, eliminating taxes on the sale of gold and silver would crack open the door for people to begin using specie in regular business transactions.This would mark an important small step toward 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 reporter didn’t include the analogy in the story, but I think it did help frame his thoughts. If nothing else, the article as published injected the idea of currency competition into the mainstream discussion.
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- Indiana House Committee Passes Bill to Take Additional Steps Against a Central Bank Digital Currency - February 23, 2024
- Wisconsin Assembly Passes Bill to Repeal Sales Tax on Gold and Silver - February 22, 2024