by Peter Schiff, Schiff Gold:
A bill introduced in the Missouri Senate for the 2023 legislative session would take important steps toward treating gold and silver as money instead of as commodities and would set the stage for currency competition in the Show-Me State.
Sen. William Eigel (R) filed SB100 last month. The legislation would take several steps to encourage the use of gold and silver as money in Missouri, including making it legal tender, eliminating the state capital gains tax on gold and silver, and establishing a state bullion depository.
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Legal Tender and Tax Reforms
Under the proposed law, gold and silver would be accepted as legal tender and would be receivable in payment of all public and private debts contracted for in the state of Missouri. Practically speaking, this would allow Missourians to use gold or silver coins as money rather than just as mere investment vehicles. In effect, it would put gold and silver on the same footing as Federal Reserve notes.
Missouri could become the fourth state to recognize gold and silver as legal tender. Utah led the way, reestablishing constitutional money in 2011. Wyoming and Oklahoma have since joined.
The effect has been most dramatic in Utah where United Precious Metals Association (UMPA) was established after the passage of the Utah Specie Legal Tender Act and the elimination of all taxes on gold and silver. UPMA offers accounts denominated in US-minted gold and silver dollars. The company was also instrumental in the development of the “Utah Goldback,” described as “the first local, voluntary currency to be made of a spendable, beautiful, physical gold.”
SB100 would also exempt the sale of gold and silver bullion from the state’s capital gains tax. Missouri is already one of 41 states that do not levy sales tax on gold and silver bullion. Exempting the sale of bullion from capital gains taxes takes another step toward treating gold and silver as money instead of commodities. Taxes on precious in metal bullion disincentivize investment and erect barriers to using gold and silver as money by raising transaction costs.
Imagine if you asked a grocery clerk to break a $5 bill and he charged you a 35-cent tax. Silly, right? After all, you were only exchanging one form of money for another. But that’s essentially what a sales tax on gold and silver bullion does. By eliminating this tax on the exchange of gold and silver, Virginia would treat specie as money instead of a commodity. This represents a small step toward reestablishing gold and silver as legal tender and breaking down the Fed’s monopoly on money.
“We ought not to tax money – and that’s a good idea. It makes no sense to tax money,” former US Rep. Ron Paul said during testimony in support an Arizona bill that repealed capital gains taxes on gold and silver in that state. “Paper is not money, it’s fraud,” he continued.
The proposed law includes a provision that would bar any state agency, department, or political subdivision from seizing gold or silver bullion.
Bullion Depository
SB100 would also establish a state bullion depository. This would not only create a safe place to store precious metals; it also has the potential to facilitate the everyday use of gold and silver in financial transactions in Missouri.
The depository would be established in the Office of the State Treasurer. The depository would serve as “the custodian, guardian and administrator of gold, silver and other precious metals transferred or acquired by the state, or an agency, political subdivision or other instrumentality of the state.” The depository would also accept deposits of gold and silver by private individuals.
Significantly, SB100 would establish a mechanism for individuals to engage in transactions using precious metals including gold and silver.
The legislation creates a regulatory structure for the depository and all transactions facilitated through it. It also establishes criteria for depository agents.
The bill is based on a similar law that was passed in Texas and signed into law by Gov. Abbott in 2015. The Texas depository received its first deposits in the summer of 2018. The following year, the state exempted precious metals in these depositories from taxation.
