Proposals introduced in the Oklahoma and Missouri legislatures during the 2024 session aim to eliminate state capital gains taxes on the sale of Gold and Silver while also redefining their status from commodities to money.
In Missouri, Rep. Doug Richey submitted HB1867 on December 11, and Rep. Bill Hardwick filed HB1955 on December 15, both corresponding to SB735 by Sen. William Eigel in the Senate earlier that month.
In Oklahoma, Sen. Shane Jett introduced SB1507, while Sen. Nathan Dahm is spearheading SB1508.
If any of these bills are enacted, they would exempt state capital gains taxes on the sale and exchange of gold and silver bullion.
Both states are already among the 42 that do not impose sales taxes on gold and silver bullion.
Removing taxes on the sale of gold and silver bullion decreases the investment expenses related to precious metals. Additionally, it furthers the recognition of gold and silver as money rather than mere commodities. Taxes on precious metal bullion create obstacles to using them as currency by inflating transaction costs.
Picture this: you ask a grocery clerk to break a $5 bill and they slap a 35-cent tax on it. Absurd, right? Essentially, that's what a sales tax on gold and silver bullion does. By scrapping this tax on their exchange, Missouri and Oklahoma would recognize these assets as money, not commodities. This marks a small step towards reinstating gold and silver as legal tender and challenging the Federal Reserve's control over currency.
“We shouldn't tax money – that's a sensible notion. Taxing money makes no sense,” remarked former U.S. Rep. Ron Paul in support of an Arizona bill that repealed capital gains taxes on gold and silver in that state. He continued, “Paper isn't money, it's deceit,” highlighting the fraudulent nature of fiat currency.
The impact of passing this legislation transcends mere tax policy. During a post-testimony event, Paul emphasized that this debate revolves around the size and scope of government.
“If you stand for limited government, you support sound money. Those who advocate for a bigger government don't want sound money. They prefer deception and fraud. They want to print money. They seek a monopoly. They aim to condition us, just as our education system has conditioned us, to believe that deficits don't matter.”
GOLD AND SILVER AS LEGAL TENDER
As per provisions in the Missouri bill, gold and silver, whether in physical or electronic form, would be recognized as legal tender and acceptable for settling all debts within Missouri. The state would be obligated to accept gold and silver for public debts, while private debts could be cleared using these metals at the parties' discretion.
Practically, this would enable Missourians to use gold or silver coins as currency rather than just as investments. Essentially, it would place gold and silver on equal footing with Federal Reserve notes.
Oklahoma took a similar step back in 2014. Utah and Arkansas are also contemplating recognizing gold and silver as legal tender.
The proposed Missouri law also allows the state to invest in gold or silver “equal to or greater than one percent of all state funds” and explicitly prohibits any state agency, department, or political subdivision from seizing gold or silver bullion.
BACKGROUND
Article I, Section 10 of the United States Constitution states, “No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts.” Presently, all debts and taxes in the US are paid with Federal Reserve Notes (dollars) or coins issued by the US Treasury – very few of which contain gold or silver.
The Federal Reserve disrupts this constitutional monetary system by establishing a monopoly based on fiat currency. Without gold or silver backing, the central bank effortlessly creates money out of thin air, depreciating purchasing power and enabling excessive federal borrowing and spending. The Federal Reserve powers the most robust government in history.
Repealing taxes dismantles one of the barriers obstructing the use of gold and silver as currency. It could initiate the process of dismantling the Federal Reserve's fiat money system, undermining it from the grassroots level and introducing competition into the monetary system.
In a paper presented at the Mises Institute, constitutional tender expert Professor William Greene highlighted that when people in multiple states actually start using gold and silver instead of Federal Reserve Notes, it would nullify the Federal Reserve and its money monopoly.
“Over time, as residents use both Federal Reserve notes and gold and silver coins, the coins' higher value retention will trigger a ‘reverse Gresham's Law’ effect. Good money (gold and silver coins) will drive out bad money (Federal Reserve notes). This shift could lead to real wealth flowing to the state treasury, increased banking activity from outside the state as people seek sound money for banking, and eventual rejection of Federal Reserve notes for transactions.”
Eventually, Federal Reserve notes would become largely undesirable and irrelevant for everyday transactions.