Arizona to End Gold and Silver Income Taxation
Arizona legislators actually get it! Gold and silver coins constitute “sound money.” And Arizona’s bill, HB 2014, headed to Governor Doug Ducey to be signed into law, affirms this realization. Upon its signing, Arizona will end capital gains taxation for those who make a profit from exchanging gold and silver coins for US Dollars.
Why is government taxing the exchange of money?
The logic behind the bill, according to Rep Mark Finchem, R-Oro Valley, is simple and clear: we don’t tax people who exchange two dimes and a nickel for a quarter! So why tax gold and silver coins--legitimate forms of currency--when exchanged into dollars?
Sure, there may at times be a “profit” in the exchange, but sound-money advocates know that such a profit is illusory: there is no “real” gain in terms of purchasing power. The gain is purely nominal and attributable to the slow devaluation of the US dollar.
Eroding faith in the US Dollar
But this bill signals something a bit more serious--a slow realization that fiat money may eventually have little to no value on its own, meaning, without the backing of a real commodity asset, such as gold or silver. As Fincham states, with regard to US dollars “...we pretend it actually has some value.”
The use and abuse of paper money
As former presidential candidate and Congressman Ron Paul has stated, history has shown that “if individuals have the freedom to choose what to use as money, they will likely opt for gold or silver.” HB 2014 acknowledges this freedom of choice against the Federal Reserve’s monopoly over money.
In an article published by NEWSMAX Ron Paul states (emphasis mine):
“HB 2014 is a very important and timely piece of legislation. The Federal Reserve's failure to reignite the economy with record-low interest rates since the last crash is a sign that we may soon see the dollar's collapse. It is therefore imperative that the law protect people's right to use alternatives to what may soon be virtually worthless Federal Reserve notes.”
Ron Paul’s message is clear: if the “value” of paper money can be artificially manipulated, then doesn’t this emphasize the artificiality (read: questionable reliability) of paper money?
Ron Paul goes even further, stating that “Paper is not money, it’s a substitute for money and it’s fraud.” To elaborate, money that is not backed by a real asset, that can be created out of thin air, and that can be inflated or devalued at the whim of a monopolizing institution is artificial and not trustworthy.
Thomas Jefferson recognized this danger as he wrote In 1813 that paper money “...has been, is, and forever will be abused” by every government that permits it. For this very reason, the men who drafted the Constitution empowered Congress to mint gold and silver--as both constitute sound money. What’s important to note is that they did not mention a word about granting any ruling class the powers to create fiat money.
Arizona is on the right side of history
Stefan Gleason, President of the Sound Money Defense League, states that “Arizona is helping lead the way in defending sound money and making it less difficult for citizens to protect themselves from the inflation and financial turmoil that flows from the abusive Federal Reserve System.”
Currently, at least 20 states are considering following in Arizona’s footsteps. Some states are rolling back sales taxes on gold and silver, while others are setting up depositories for precious metals so that citizens can save or make transactions in bullion.
Robust solutions to the demise of paper money
At the time of this writing, the Dow Jones has fallen -323.37 points, the S&P down -34.81 points, all due to investors’ concerns over news coming out of the White House, particularly former FBI Director James Comey’s memos on President Trump (investors fearing that the memos may derail the President’s agenda). Gold futures reached a high of 1260.50 with silver futures trading up to 17.035.
A relatively small and short-term instance of volatility? We’ll see. Nevertheless, the main point is that such a drastic market move move demonstrates the nervous reactions of markets to news. Markets do not like uncertainty. But in this day and age--especially considering the larger-scale swamp-draining we’re about to see in Washington and the slow demise of the US Dollar--uncertainty is not an exception...it’s the norm. And extreme uncertainty = extreme volatility.
Protecting yourself against market volatility and turmoil, as well as the long-term decline of paper money, can only be achieved by holding sound money.
And as Arizona has demonstrated through the passing of HB 2014, we too would be wise in recognizing the critical importance of gold and silver as the only legitimate forms of sound money.