A bill introduced in the Kansas House would exempt gold and silver bullion, and other precious metals, from sales tax, taking a small but important step toward rejecting the Federal Reserve’s monopoly on money.
The House of Delegates Taxation Committee introduced House Bill 2421 (HB2421) on May 2. The legislation would exempt gold and silver bullion, along with other precious metals and some coins, from state sales and compensating use tax. The bill would add the following to the list of things exempt from such taxes.
All sales of gold, silver and numismatic coins; palladium, platinum, gold or silver bullion; and currency. For the purposes of this subsection, “bullion” means bars, ingots, or commemorative medallions of gold, silver, platinum, palladium, or a combination thereof, for which the value of the metal depends on its content and not the form. “Currency” means a coin or currency made of gold, silver or other metal or currency made of paper.
Passage of this legislation would remove one major roadblock for the use of gold and silver as money in Kansas.
The bill would take a small step toward breaking the Federal Reserve’s monopoly on money by making it easier for Kansans to use gold and silver in transactions. Should they start doing so, this would introduce competition into the monetary system and build a strong alternative to Federal Reserve Notes (dollars) when doing business.
HB2421 would also incentivize investors who want to protect their wealth from currency devaluation by investing in gold and silver bullion. This would make it easier for Kansans to shelter themselves from the effects of quantitative easing and other central bank policies that steadily erode the value the dollar.
State regulations discouraging its use create one of the biggest obstacles to people developing ways to use gold and silver as money. HB2421 would remove one barrier.
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.”
HB2421 would help facilitate a movement toward that constitutional ideal, ignored for decades in every state. Encouraging the use of gold and silver undermines the Federal Reserve monopoly by introducing competition into the monetary system.
Professor William Greene is an expert on constitutional tender and 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.
While not as all-encompassing as a Constitutional Tender Act, HB2421 would represent a first step toward reestablishing gold and silver as tender within Tennessee, and provide a foundation for further action.
HB2421 was referred to the Committee on Taxation where it will need to pass by a majority vote before moving forward in the legislative process.
This article originally appeared on Tenth Amendment Center.