CHARLESTON, W.Va. (Jan. 11, 2024) – A bill filed in the West Virginia House would make certain gold and silver coins legal tender in the state and would provide a credit for federal capital gains tax on the same. Passage into law would eliminate barriers to using gold and silver in everyday transactions, a foundational step for the people to undermine the Federal Reserveโs monopoly on money.
Del. Chris Pritt introduced House Bill 4343 (HB4342) on Jan. 10. Under the proposed law, gold and silver coins issued by the federal government would be deemed legal tender in this state.
Passage into law would make West Virginia the fifth state to recognize gold and silver as legal tender. Utah led the way, reestablishing constitutional money in 2011. Wyoming,ย Oklahoma, andย Arkansas have since joined. Practically speaking, this would allow West Virginians to use gold or silver coins as money rather than just as mere investment vehicles. In effect, it would put gold and silver on the same practical footing as Federal Reserve notes.
The effect has been most dramatic in Utah where the legal tender law opened the door for the development of a gold and silver market in the state. With some legal hurdles cleared away by the state,ย the United Precious Metal Associationย (UPMA) in partnership withย Alpine Gold Exchangeย set up the stateโs first โgold bank.โ The Utah Specie Legal Tender Act has also led to the creation ofย Goldbacks, a local, voluntary medium of exchange. Goldbacks are notes made from fractions of an ounce of physical gold. The company created a process that turns pure gold into a spendable physical form for small transactions.
TAXES ON GOLD AND SILVER
In 2019, West Virginia took the first step toward treating gold and silver as money by repealing the state sales tax on gold and silver bullion. HB4342 would take a second step by creating a tax credit for capital gains on the exchange of gold or silver for another coin or form of legal tender.
Repealing sales taxes on precious metal bullion takes a step toward treating gold and silver as money instead of commodities. Taxes on precious metal bullion erect barriers to using gold and silver as money by raising transaction costs. Asย Sound Money Defense Leagueย policy director Jp Cortez testified during a committee hearing onย a similar bill in Wyomingย in 2018, charging taxes onย money itselfย is beyond the pale.
โIn effect, states that collect taxes on purchases of precious metals are inherently saying gold and silver are not money at all.โ
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 thatโs essentially what Kansasโs sales tax on gold and silver bullion does. By eliminating this 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 Fedโs monopoly on money.
โWe ought not to tax money โ and thatโs a good idea. It makes no sense to tax money,โ former U.S.ย Rep. Ron Paul said during testimony in supportย an Arizona billย that repealed capital gains taxes on gold and silver in that state. โPaper is not money, itโs fraud,โ he continued.
INVESTING STATE FUNDS IN GOLD AND SILVER
Pritt also filed House Bill 4582 (HB4582). The legislation would empower the West Virginia State Treasurer to invest in gold and silver. This would allow the state to protect its funds from the constant depreciation caused by Federal Reserve money creation.
BACKGROUND
The United States Constitution states in Article I, Section 10, โNo State shallโฆmake any Thing but gold and silver Coin a Tender in Payment of Debts.โ Currently, all debts and taxes in West Virginia 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 โ 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 wouldnโt be able to maintain all of its unconstitutional wars and programs.ย The Federal Reserve is the engine that drives the most powerful government in the history of the world.
Repealing taxes on gold and silver also takes the first step in the process of abolishing the Federal Reserve system by attacking it from the bottom up โ 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.
Inย a paperย presented at the Mises Institute, 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 governmentโs monopoly on money.
โOver 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 โreverse Greshamโs Lawโ 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 stateโs treasury, an influx of banking business from outside of the state โ as people in other states carry out their desire to bank with sound money โ and an eventual outcry against the use of Federal Reserve notes for any transactions.โ
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.
WHATโS NEXT
Both HB4342 and HB4582 were referred to the House Banking and Insurance Committee. The bills must get hearings and pass the committee by a majority vote before moving forward in the legislative process.
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