Small Step Forward for Gold In Arizona

On February 4, I testified before the Arizona House Federalism and States’ Rights Committee in support of HB 2173. The bill recognizes gold and silver as legal tender and eliminates taxes on them.

Sometimes, the best and most effective thing you can do is show up. I think the outcome of the vote was all but predetermined, but I made new friends, and renewed friendships with liberty movement activists. Everyone in the room favored the passage of the bill, with the exception of a few legislators.
In my five minutes, I made arguments that I’ve made here in this column. I talked about the long slow decline of the dollar, the exponential rise of debt—which I called a “feature, not a bug”—and the impossible situation of retirees unable to earn a yield on their savings.

grand canyon state

Two Representatives who oppose the bill asked questions. Rep. Rebecca Rios asked if the bill actually did anything. I said it eliminates capital gains tax on gold and silver at the state level (I didn’t have a chance to say it will likely make gold clauses enforceable in state court). She asked, “aren’t we free to use gold in trade now?” I said no, because the capital gains tax imposes a strong disincentive to gold circulation.

Rep. Bruce Wheeler asked about the cost to the state for equipment to verify the coins are not counterfeit. A detector for fake gold Eagles is $169. He asked if the state will be forced to accept gold in payment of taxes. Not under this bill. Not many people will want to pay tax in gold, but it would certainly be good for Arizona if they did. Oddly, he asked about my credentials. I said I hope the merits of my arguments stand on their own.
In their closing remarks, they expressed additional concerns. Rep. Rios noted that the lion’s share of the capital gains tax is at the federal level, and that’s a reason to keep the state-level tax. A few minutes after testimony explaining that gold does not go up—that the dollar goes down—she said it’s not fair to exempt gold from the tax paid on other investments when they go up.

Rep. Wheeler’s stated he wants to protect his taxpayer constituents from the harm to the government’s finances from this bill. I wish I could have told him that the Gold Standard Institute estimated that the current gold and silver tax revenues to the state are only a few hundred thousand dollars. In contrast to the negligible revenue it generates, it prevents real economic growth (and tax revenues).

Rep. Wheeler asserted, “if you like how the euro works, you’ll love gold.” It’s a non sequitur. The euro is failing because of unpayable debts. He added that the government needs the discretionary power provided by an elastic currency.

What does an elastic currency mean? It means the government has the power to rob savers. This is what we’re up against. The people deserve monetary freedom, but some legislators don’t want them to have it. They use the taxpayer as a pretext for keeping control. They appeal to fear of economic depressions to get people to support their control over our money.

At the end of the talking, came the voting. The Secretary went to each Representative and tallied the results. The bill passed 5-3. All three Democrats voted nay, with Rep. Ceci Velasquez joining Reps. Rios and Wheeler. I wish I had a chance to explain the case for the Gold Standard for Democrats. Gold, and especially silver, is the money of the people.

That day in Arizona, freedom took a small step forward. It took another step forward last Monday when HB 2173 passed the Rules Committee and again on Thursday when the bill passed the Committee of the Whole.

Keith Weiner is president of the Gold Standard Institute USA in Phoenix, Arizona, and CEO of the precious metals fund manager Monetary Metals. He created DiamondWare, a technology company that he sold to Nortel Networks in 2008. He has his PhD from the New Austrian School of Economics. He lives with his wife near Phoenix, Arizona. In March 2015 he moved his Gold Standard column from Forbes to SNBCHF.com.
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