CHEYENNE, Wyo. (July 2, 2018) – Yesterday, a law defining gold and silver specie as legal tender and eliminating all taxes levied on it became law. This paves the way for Wyoming residents to use gold and silver in everyday transactions, a foundation step for the people to undermine the Federal Reserve’s monopoly on money.
A bipartisan coalition of 11 Republicans introduced House Bill 103 (HB103) on Feb. 15. Titled the Wyoming Legal Tender Act, the new law defines gold and silver specie as “legal tender,” meaning it will be recognized as a medium of exchange for the payment of debts and taxes in the state. Practically speaking, gold and silver specie will be treated as money, putting it on par with Federal Reserve notes in Wyoming.
The law defines specie as coins having gold or silver content, or refined bullion, coined, stamped or imprinted with its weight and purity.
HB103 also prohibits the state or local governments from levying any property, sales of capital gains taxes on gold or silver specie. Wyoming does not have an income tax. However, it does have a sales tax, and until today, it assessed this tax against precious metals bullion.
Along with the Tenth Amendment Center, the Sound Money Defense League, Campaign for Liberty, and Money Metals Exchange all backed the legislation. Sound Money Defense League Policy Director Jp Cortez testified during a committee hearing, saying that charging sales taxes on money itself is beyond the pale.
“In effect, states that collect taxes on purchases of precious metals are inherently saying gold and silver are not money at all.”
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 taxes on gold and silver bullion do. By removing the taxes on the exchange of gold and silver, Wyoming will treat specie as money instead of a commodity. This represents a step toward reestablishing gold and silver as legal tender and breaking down the Fed’s monopoly on money.
Ron Paul produced a video urging the Wyoming governor to sign HB103 into law. He noted that things move agonizingly slow in Washington D.C. Passing bills like this at the state level are an important step toward real monetary reform.
“It’s just to me sad that we are so far removed from the Constitution. But a little bit here and a little bit there, there is going to be a revolution in monetary policy.”
Paul emphasized that monetary reform is an important step toward reducing the power of the federal government.
“Believe me, the size and scope and interference of government would change a whole lot if we could rein in the monetary system, rein in the Federal Reserve and rein in this spending.”
Paul also offered testimony in support an Arizona bill that repealed capital gains taxes on gold and silver in that state.
“We ought not to tax money – and that’s a good idea. It makes no sense to tax money,” he said. “Paper is not money, it’s fraud,” he continued.
Enactment of HB103 into law takes an important first 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 freedom of choice expanded by HB103 would help allow Wyoming residents to secure the purchasing power of their money.
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 a state to return to a constitutional sound money system when it taxes gold and silver as a commodity.
This Wyoming law reestablishes gold and silver as legal tender in the state and takes a step towards that constitutional requirement, ignored for decades in every state. This sets 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 could create a “reverse Gresham’s effect,” drive out bad money, 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.