PHOENIX, Ariz. (Mar. 8, 2017) – Today, an Arizona Senate Committee passed a bill that would eliminate state capital gains taxes on gold and silver specie, and encourage its use as currency. Final approval of the legislation would help undermine the Federal Reserve’s monopoly on money.
Former US Rep. Ron Paul testified today in the Senate Finance Committee in support of House Bill 2014 (HB2014). The legislation, which previously passed the state House by a 35-24 vote, would eliminate state capital gains taxes on income “derived from the exchange of one kind of legal tender for another kind of legal tender.” The bill defines legal tender as “a medium of exchange, including specie, that is authorized by the United States Constitution or Congress for the payment of debts, public charges, taxes and dues.” “Specie” means coins having precious metal content.
In effect, passage of the bill would, as Paul noted, “legalize competition in a Constitutional fashion.”
Under current Arizona law, gold and silver are subject to capital gains tax when exchanged for Federal Reserve notes, or when used in barter transactions. If the purchasing power of the Federal Reserve note has decreased due to inflation, the metals’ nominal dollar value generally rises and that triggers a “gain.” In most cases, of course, the capital gain is purely fictional. But these “gains” are still taxed — thus unfairly punishing people using precious metals as money.
“We ought not to tax money, and that’s a good idea. It makes no sense to tax money,” said Paul. “Paper is not money, it’s a substitute for money and it’s fraud,” Paul continued, noting the importance of honesty money vs federal reserve notes.
Today, the Senate Finance Committee passed the bill by a 4-3 vote along party lines.