By Clint Siegner, Money Metals Exchange
Inflation is the most pernicious of taxes levied by our government. Officials systematically devalue the Federal Reserve Note “dollar,” then levy capital gains taxes on assets when their dollar price rises.
The “gains” are largely illusory. Rising asset prices over time reflect the fact that the dollar buys less of everything. But the tax obligations triggered by this inflation are very real.
Bills calling for the elimination of capital gains taxes on money, i.e. precious metals, have recently been introduced in both Idaho and Arizona.
Money Metals Exchange president Stefan Gleason testified at the hearing and pointed out that “by taxing so-called gains on exchanging precious metals for devalued Federal Reserve Notes, we’re adding another tax on top of the inflation tax.”
Idaho State Representative Ron Nate adroitly observed, “Citizens aren’t allowed to declare capital losses when the dollars they hold lose value. So, it isn’t fair to tax capital gains when the gold and silver they own rises in value.”
The Idaho bill – HB206 – passed the House Committee on Revenue and Taxation last Thursday and is expected to come up for a vote on the house floor in the coming days.
The Arizona House of Representatives passed its own version of the Idaho bill, HB2014, in mid-February, sending it on to the state Senate which is holding a hearing this Wednesday. Former Congressman Ron Paul is scheduled to testify.
Meanwhile, Alabama, Tennessee, Virginia, and Maine are working to eliminate sales taxes on gold and silver bullion.
Supporters of sound money are working hard to reestablish gold and silver as money according to state law and to make sure it is treated as such in the tax code. Trading one form of money for another should not trigger any tax. There is no sales tax when customers swap their precious metals for dollars, so switching dollars to bullion should also be tax exempt.
Oklahoma, Utah, Texas, Idaho, and nearly 20 other states already exempt precious metals from sales tax. Utah and Oklahoma have gone one step further, reaffirming the U.S. Constitution’s designation of gold and silver as legal tender. As such the metals are free from all state taxes – including capital gains.
Texas and Tennessee have both approved measures to establish precious metals depositories in their states. Utah legislators are now considering a bill to authorize the same. The idea is to facilitate ownership of gold and silver bullion in state-run investment funds including pensions.