JUNEAU, Alaska (April 19, 2021) – A bill introduced in the Alaska House would exempt gold and silver bullion coins from the state sales tax and make them legal tender in the state. Passage of this bill would not only relieve some of the tax burdens on investors, but it would also 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.
A coalition of Republicans introduced House Bill 167 (HB167) on April 16. The legislation would exempt the exchange of specie from a sales or use tax. Specie is defined as a coin that has gold or silver content, or a coin made of refined gold or silver bullion that is imprinted with its weight and purity and is valued primarily based on its metal content and not on its form.
HB167 would also make gold and silver specie legal tender in the state, recognizing it as a medium of exchange for the payment of debts and taxes. In effect, gold and silver specie would be treated as money, putting it on par with Federal Reserve notes in Alaska.
Under the proposed law, specie legal tender would be defined as:
(a) Specie coin issued by the United States government at any time; or
(b) any other specie that a court of competent jurisdiction, by final and unappealable order, rules to be within state authority to make or designate as legal tender
By allowing the court to designate additional specie to be used as legal tender, Alaska could free its citizens from potential supply constraints imposed by the use of only United States minted gold and silver coin. More importantly, the people of the state of Alaska would be able to define what specie is considered constitutional tender, further distancing themselves from potential control of their competing currency by Washington D.C.
Finally, HB167 would create a study in the House Finance Committee on the “possibility of establishing an alternative form of legal tender for the payment of debts, public charges, taxes, and other money owed to the state.” This would open the door to making crypto legal tender.
Passage of HB167 would eliminate a significant barrier to using gold and silver in everyday transactions, a foundational step for people to undermine the Federal Reserve’s monopoly on money.
In 2011, Utah became the first state in over 80 years to pass a law making gold and silver coin legal tender. The following year, the legislature followed up, approving a bill clarifying several tax measures and more importantly, expanding the definition of specie to include gold and silver coin approved by the state. With the law in place, United Precious Metals Association (UPMA) opened a “gold bank” that offers publicly available accounts denominated in gold and silver dollars in Utah. According to the UPMA, in the past year, it has grown 700 percent in assets under management and made up 2 percent of the market for U.S gold and silver coins. Account-holders can make everyday transactions using their accounts through a debit card system.
With the passage of HB167, Alaska would follow Utah’s lead and take a step toward treating gold and silver specie as money instead of a commodity
The repeal of the sales tax is an important part of the equation. As Sound Money Defense League Policy Director Jp Cortez testified during a committee hearing on a similar bill in Wyoming last year, 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 taxes on gold and silver bullion do. By removing the sales tax on the exchange of gold and silver, Kansas 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 proposed law’s impact 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, officially making gold and silver specie legal tender and eliminating sales 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 will be able to choose the time-tested stability of gold and silver over the central bank’s rapidly-depreciating paper currency.
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.” Currently, all debts and taxes in South Carolina are either paid with Federal Reserve Notes (dollars) which were 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.
The Federal Reserve destroys this constitutional monetary system by creating a monopoly based on its fiat currency. Without the backing of gold or silver, the central bank can easily create money out of thin air. This not only devalues your purchasing power over time; it also allows the federal government to borrow and spend far beyond what would be possible in a sound money system. Without the Fed, the U.S. government wouldn’t be able to maintain all of its unconstitutional wars and programs. The Federal Reserve is the engine that drives the most powerful government in the history of the world.
The passage of HB167 would take a step toward establishing gold and silver as legal tender in the state and that constitutional requirement, ignored for decades in every state. This sets the stage to undermine the monopoly of the Federal Reserve by introducing competition into the monetary system.
Repealing taxes on gold and silver would also take the first step in the process of abolishing the Federal Reserve system by attacking it from the bottom up – pulling the rug out from under it by working to make its functions irrelevant at the state and local levels, and setting the stage to undermine the Federal Reserve monopoly 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.
HB167 has been referred to the House Community and Regional Affairs Committee. It must be scheduled for a hearing and pass out with a majority vote in order to continue on in the legislative process.
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