CHEYENNE, Wyo. (Mar. 7, 2018) – Today, the Wyoming Senate passed a bill that would define gold and silver specie as legal tender and eliminate all taxes levied on it. Final passage into law would pave the way for the use of gold and silver in everyday transactions and could help undermine the Federal Reserve’s monopoly on money.
A bipartisan coalition of 11 Republicans introduced House Bill 103 (HB103) on Feb. 15. Titled the Wyoming Legal Tender Act, the legislation defines gold and silver specie as “legal tender,” meaning it would be recognized as a medium of exchange for the payment of debts and taxes in the state. Practically speaking, gold and silver specie would be treated as money, putting it on par with Federal Reserve notes in Wyoming.
The bill defines specie as coins having gold or silver content, or refined bullion, coined, stamped or imprinted with its weight and purity.
HB103 would also prohibit the state or local governments from levying any property, sales of capital gains taxes on gold or silver specie. Wyoming does not have an income tax. However, it does have a sales tax and it assesses this tax against precious metals bullion
Along with the Tenth Amendment Center, the Sound Money Defense League, Campaign for Liberty, and Money Metals Exchange all back the legislation. Sound Money Defense League Policy Director Jp Cortez testified during a committee hearing, saying that charging sales taxes on money itself is beyond the pale.
“In effect, states that collect taxes on purchases of precious metals are inherently saying gold and silver are not money at all.”
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 taxes on gold and silver bullion do. By removing the taxes on the exchange of gold and silver, Wyoming would treat specie as money instead of a commodity. This represents a step toward reestablishing gold and silver as legal tender and breaking down the Fed’s monopoly on money.
“We ought not to tax money – and that’s a good idea. It makes no sense to tax money,” former U.S. Rep. Ron Paul said during testimony in support an Arizona bill that repealed capital gains taxes on gold and silver in that state. “Paper is not money, it’s fraud,” he continued.
Final passage of HB103 into law would take an important first 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 freedom of choice expanded by HB103 would help allow Wyoming residents to secure the purchasing power of their 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 bill would reestablish gold and silver as legal tender in the state and take a step towards that constitutional requirement, ignored for decades in every state. This 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.
HB103 will now go back to the House for concurrence with the Senate amendments.