The Phaserl


Idaho Bill Would End Taxation Of Gold And Silver

by JP Cortez, Activist Post:

The Framers of our nation established that gold and silver are money, but federal taxing authorities in recent decades have required taxpayers to pay taxes on this form of money when its exchange for Federal Reserve Notes results in nominal capital “gains.”

But that problem may soon be mitigated, at least in Idaho.

A prominent Gem State state representative has advanced legislation to remove state income taxes when Idaho taxpayers sell their precious metals.

House Majority Leader Mike Moyle introduced House Bill 206 on February 23rd to amend Idaho revenue statutes, providing “that capital gains and losses on precious metals bullion and monetized bullion sales be added to or subtracted from Idaho taxable income.”

Similar to a bill recently passed by Arizona’s state House, Idaho HB206 is a pure and tax neutral proposal. That’s because both precious metals gains (income) and losses are backed out of the calculation of one’s Idaho taxable income. While HB206’s passage will have little fiscal impact as to Idaho tax revenues, it will have a larger impact on Idahoans’ freedoms.

Enjoying the backing of the Sound Money Defense League, the Idaho Freedom Foundation, and Money Metals Exchange (an Idaho-based national precious metals dealer), the Idaho proposal seeks to correct the misclassification of precious metals by the IRS as “property” rather than money. It is only because of this misclassification in the first place that precious metals income and losses are included in the federal adjusted gross income number that flows through to the taxpayer’s Idaho tax return.

Assessing Income Taxes on the Exchange of Money Is Unjust

Income taxes are one major way government bureaucrats penalize holders of precious metals. If you own gold to protect against the ongoing devaluation of America’s paper currency (which results from the inflationary practices of the Federal Reserve), you may end up with a “gain” on your gold when it’s priced in dollars. Not necessarily a real gain, mind you. It’s frequently nothing more than a nominal gain – but it’s nonetheless considered income against which the government assesses a tax.

The Federal Reserve strives for and openly announces a target inflation rate, and it’s these policies that cause these artificial “gains” which precious metals owners experience.

By removing precious metals from the state income tax, Idaho can stop compounding the problem and instead help promote the adoption and widespread use of constitutional money.

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2 comments to Idaho Bill Would End Taxation Of Gold And Silver

  • rich

    Score One for the Bank Whistle-Blowers The former employees, Paul Bishop from World Savings and Robert Kraus from Wachovia, filed the suit in 2011 under the False Claims Act; they seek damages from Wells Fargo on behalf of taxpayers for improprieties that occurred before and during the mortgage crisis.

    Both men were fired after they told their superiors about the frauds. Mr. Bishop was a residential mortgage sales representative at World Savings, while Mr. Kraus was vice president and controller for the Real Estate Capital Markets group and the Corporate and Investment Bank Finance group at Wachovia. His expertise was in commercial real estate lending.

    According to the lawsuit, the fraud identified by Mr. Kraus involved accounting maneuvers using an off-balance sheet entity that made Wachovia’s books look better than they were. Insiders at the bank had a name for the entity: the Black Box.

    If Wachovia wanted to hide certain loans from internal or regulatory review, bank officials would temporarily move them to the Black Box, Mr. Kraus contended. This was problematic because accounting rules stated that off-balance sheet vehicles must be “demonstrably distinct” from the entities transferring loans to them. The Black Box was not, so the loans in it should have been consolidated onto the Wachovia balance sheet.

    How big was the Black Box? As of Aug. 1, 2005, it contained some $6 billion in loans and other assets, the lawsuit said. That amounted to almost 13 percent of Wachovia’s equity capital at the time.

    The plaintiffs contended that the use of the Black Box obscured risks at the bank and violated Sarbanes-Oxley, the Enron-era law that required executives to certify the accuracy of their companies’ financial reports. The Black Box kept billions of dollars in commercial real estate loans “outside the prying and meddling eyes of its regulators, shareholders, and risk management, internal control and accounting personnel,” the lawsuit said.

    For both of the plaintiffs, the case has provided a wrenching education about what happens to those who speak truth to power.

    Mr. Kraus, for example, has been unable to find work as a finance executive even with his deep experience and a master’s degree from New York University. He currently works at a McDonald’s in North Carolina and narrowly avoided losing his home to foreclosure.

    “When you blow the whistle, you better be clear that you are on your own,” said Mr. Bishop, who is 69. “I naïvely believed there was a system behind me that would enforce the rules.”

    Take the precious metal bar over the black box.

  • Ed_B

    Ending taxation on gold and silver “profits”, which aren’t really profits at all but merely the maintaining of one’s buying power when fiat currency inflates, is a good step in the right direction. The problem is that federal taxation is a much larger piece of the tax pie than state taxes. What we really need is a federal law that removes the taxes on converting any form of money into any other form of money. If we go into a bank and swap a $50 FRN for 5 $10 FRNs, there is no tax on that transaction, so why should there be a tax on swapping gold or silver coins for FRNs? Answer: there shouldn’t be… but there is because Uncle Sugar doesn’t want people to own gold or silver and this is just another way of discouraging it while picking up a little extra money for the US Treasury. Perhaps a middle of the road tax law change would be for profits on bullion not to be taxed while profits on numismatic coins are taxed? I would prefer no tax on any gold or silver coin profits, of course, but one takes what one can get in terms of tax reduction. Once bullion profits are not taxed, perhaps the tax on numismatic coins could be removed at a later date? If so, then that would be great.

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