BISMARCK, N.D. (Feb. 10, 2025) – Last week, the North Dakota House passed a bill that would repeal the state’s capital gains tax on gold and silver bullion. The proposed law would remove a barrier to using gold and silver as money.
Rep. Daniel Johnston and eight cosponsors filed House Bill 1379 (HB1379). State individual and corporate taxes are calculated based on federal taxable income reported to the IRS. HB1379 would allow both individual and corporate taxpayers to reduce their state taxable income by the amount of any capital gain on gold and silver legal tender coins and bullion reported to the IRS.
In effect, HB1379 would end state capital gains taxes on gold and silver bullion.
Under the proposed law, “bullion” is defined as “precious metal that has been refined to a purity of not less than nine hundred ninety – nine parts per one thousand and is in such form or condition that its value depends on its precious metal content and not its form.”
On Feb. 6, the House passed HB1379 by an 82-10 vote.
IMPACT
Taxes on precious metal bullion erect barriers to using gold and silver as money by raising transaction costs.
North Dakota 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 Ron Paul said during testimony in support of an Arizona bill that repealed capital gains taxes on gold and silver in that state.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 most states 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
HB1379 now moves to the House for further consideration. It will be referred to a committee where it must get a hearing and pass by a majority vote before moving forward in the legislative process.
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