JACKSON, Miss. (Feb 13, 2020) – Two bills introduced in the Mississippi House would exempt gold and silver bullion from the state sales tax. Enactment of this legislation would eliminate one barrier to using gold and silver in everyday transactions, a foundational step for people to undermine the Federal Reserve’s monopoly on money.

Rep. Henry Zuber (R-Ocean Springs) introduced House Bill 615 (HB615) and House Bill 616 (HB616) on Feb. 6. The language in the two bills is slightly different but both would have the same practical effect – the repeal of the state sales tax on the sale of gold, silver, platinum or palladium bullion.

HB615 defines bullion as “bars, ingots, or commemorative medallions of gold, silver, platinum, palladium, or a combination of these materials for which the value of the metal depends on its content and not its form.” HB616 takes a slightly different approach, stipulating that to qualify for the exemption, bullion must “be refined and contain at least ninety percent (90%) gold, silver, platinum, or palladium or some combination of these metals, and the sales price of the item must fluctuate with and depend on the market price of the underlying precious metal, and not on the item’s rarity, condition, age, or other external facto.”

Sen. Joey Fillingane (R-Sumrall) introduced a similar bill in the Senate last month.

IN PRACTICE

With the passage of any of these bills, Mississippi could take a step toward treating gold, silver, platinum and palladium as money instead of commodities. As Sound Money Defense League policy director Jp Cortez testified during a committee hearing on a similar bill in Wyoming in 2018, charging 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 Mississippi’s sales tax on gold and silver bullion does. By eliminating this tax on the exchange of gold and silver, Mississippi 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.

“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.

The impact of enacting this legislation would go 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.”

Practically speaking, eliminating taxes on the sale of gold and silver cracks open the door for people to begin using specie in regular business transactions. This marks an important small step toward currency competition.

The effect has been most dramatic in Utah where United Precious Metals Association (UMPA) was established after the passage of the Utah Specie Legal Tender Act and the elimination of all taxes on gold and silver. UPMA offers accounts denominated in U.S. minted gold and silver dollars. The company also recently released the “Utah Goldback.” UPMA describes it as “the first local, voluntary currency to be made of a spendable, beautiful, physical gold.”

If sound money gains a foothold in the marketplace against Federal Reserve notes, the people will be able to choose the time-tested stability of gold and silver over the central bank’s rapidly-depreciating paper currency.

Constitutional tender expert Professor William Greene wrote that when people in multiple states actually start using gold and silver instead of Federal Reserve Notes, it could create a “reverse Gresham’s effect,” drive out bad money, 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.

WHAT’S NEXT

HB615 and HB616 were both referred to the House Ways and Means Committee where they must pass by a majority vote before moving forward in the legislative process.

Mike Maharrey