OKLAHOMA CITY, Okla. (Jan. 6, 2025) – A bill filed in the Oklahoma Senate would significantly expand the types of gold and silver recognized as legal tender in the state and repeal the state capital gains tax on bullion sales. If passed, it would build on previous steps to reestablish constitutional money, positioning the people of Oklahoma to actively challenge the Federal Reserve’s fiat monopoly.
Sen. Shane Jett filed Senate Bill 284 (SB284). In 2014, Oklahoma took the first step and declared gold and silver coins issued by the United States government are legal tender in the State of Oklahoma. That bill also expanded the sales tax exemption on gold and silver. SB284 would improve and clarify the definition of specie legal tender.
The language in the new definition retains the definition of gold and silver bullion coins issued by the U.S. government as legal tender and explicitly specifies that “legal tender may be used to pay public debt in this state.” In effect, this would require the state to accept gold and silver for payment of taxes, fees, and other obligations.
Oklahoma is among five states that have legally recognized gold and silver as legal tender, as they always should have been doing. Utah led the way, reestablishing constitutional money in 2011. Wyoming, Oklahoma, Arkansas, and Louisiana have since joined.
Utah took a step-by-step approach, similar to the strategy being followed in Oklahoma. A combination of at least four state laws, plus plenty of steps forward by businesses and individuals has built what is likely the most robust foundation for the advancement of gold and silver as money in the United States.
IN PRACTICE
Practically speaking, recognizing gold and silver as legal tender allows Oklahoma residents to use them as money rather than as mere investment vehicles.
Passage of SB284 would represent another step against the fiat-based Federal Reserve system by creating a foundation to pull the rug out from under it on the state and local levels. In essence, it would set the stage for the people themselves to undermine the Federal Reserve monopoly by introducing competition into the monetary system.
The next step would be for people to start taking advantage of the status of gold and silver as money by using both as such instead of Federal Reserve notes.
The effect has been most dramatic in Utah where the Specie Legal Tender Act opened the door for the development of a robust gold and silver economy in the state. With some legal hurdles cleared away by the state’s legal tender law, the United Precious Metal Association (UPMA) in partnership with Alpine Gold Exchange set up the state’s first “gold bank.”
The act also led to the creation of the Goldback, 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.
GOLD CONTRACT CLAUSE
SB284 also specifies that “no person shall compel another person or entity to tender or accept specie for the payment of any debt except as agreed to by agreement or contract.”
In practice, including this contract clause means if parties voluntarily agree to be paid, or to pay, in gold and silver coin or bullion, the Oklahoma courts could not substitute any other thing, e.g. Federal Reserve Notes, as payment.
The principle behind a gold clause contract is simple. It requires that payment must be made in a specific amount of gold or its paper equivalent. For example, a mortgage might stipulate that repayment must be in the form of 30 ounces of gold. Gold clauses protect the parties to a contract from currency debasement, and incentivize the use of sound money.
REMOVING TAXES
Under SB284, special legal tender would be exempt from all forms of taxation.
“The purchase, sale, or exchange of any type or form of specie, including legal tender, shall not give rise to any tax liability in this state.”
It would also specifically repeal the state’s capital gains tax on gold and silver bullion.
Taxes on precious metal bullion erect barriers to using gold and silver as money by raising transaction costs.
Oklahoma is already one of 45 states that do not levy sales tax on gold and silver bullion. Exempting the sale of bullion from capital gains taxes takes another 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.
Imagine if the IRS sent you a bill every time the dollar strengthened against the euro. That’s effectively what capital gains taxes on gold and silver do. As the precious metals prices go up due to the devaluation of the dollar, the government levies a tax on you. It is essentially a tax on the superior performance of gold and silver as 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 of an Arizona bill that repealed capital gains taxes on gold and silver in that state. “Paper is not money, it’s fraud,” he continued.
BACKGROUND
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 Oklahoma 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 paper 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.
State bills that facilitate and encourage the use of sound money create a playing field where people can push back against the Fed’s monetary malfeasance. Ultimately, it could create a scenario where people can drive out the “bad” fiat money with “good” sound money.
WHAT’S NEXT
SB284 will be referred to a committee when the legislative session begins on Feb. 3.
