RALEIGH, N.C. (June 26, 2017) – Today, a second North Carolina Senate committee passed a bill that would exempt the sale and purchase of gold and silver from state sales taxes, encouraging their everyday use and taking the first step toward breaking the Federal Reserve’s monopoly on money.
Rep. Dana Bumgardner (R-Gastonia) and Rep. Jeff Collins (R-Rocky Mount) introduced House Bill 434 (H434) in March. The legislation would exempt previous metals in various forms, including investment metal bullion, U.S. Mint-produced gold and silver, investment coins and non-coin currency, from state sales tax.
Today the Committee On Rules and Operations of the Senate passed H434. Last week, the Committee on Finance approved the measure. The House previously passed H434 on second reading by a 104-8 vote. It then gave final approval on the third reading by a voice vote.
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 North Carolina’s sales tax on gold and silver does. By removing the sales tax on the exchange of gold and silver, North Carolina 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.
Practically speaking, eliminating taxes on the sale of gold and silver would crack open the door for people to begin using gold and silver in regular business transactions.This would mark an important small step toward currency competition. If sound money gains a foothold in the marketplace against Federal Reserve notes, the people would be able to choose the time-tested stability of gold and silver over the central bank’s rapidly-depreciating paper currency.
The United States Constitution states in Article I, Section 10, “No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts.” States have simply ignored this constitutional provision for years. It’s impossible for states to return to a constitutional sound money system when it taxes gold and silver as a commodity.
This North Carolina bill takes a step towards that constitutional requirement, ignored for decades in every state. Such a tactic would set the stage to undermine the monopoly of the Federal Reserve by introducing competition into the monetary system.
Constitutional tender expert Professor William Greene said when people in multiple states actually start using gold and silver instead of Federal Reserve Notes, it would effectively nullify the Federal Reserve and end the federal government’s monopoly on money.
“Over time, as residents of the state use both Federal Reserve notes and silver and gold coins, the fact that the coins hold their value more than Federal Reserve notes do will lead to a “reverse Gresham’s Law” effect, where good money (gold and silver coins) will drive out bad money (Federal Reserve notes). As this happens, a cascade of events can begin to occur, including the flow of real wealth toward the state’s treasury, an influx of banking business from outside of the state – as people in other states carry out their desire to bank with sound money – and an eventual outcry against the use of Federal Reserve notes for any transactions.”
Once things get to that point, Federal Reserve notes would become largely unwanted and irrelevant for ordinary people. Nullifying the Fed on a state by state level is what will get us there.
H434 will now move to the full Senate for further consideration.