Representative Nichols has introduced House Bill 602, a tax-neutral measure to exclude from gross income any net capital gain and any net capital loss derived from the exchange of precious metals bullion in Idaho.
Policies that penalize savers in precious metals reduce the likelihood that Idaho citizens will take prudent steps to insulate themselves from the inflation and financial turmoil caused by the Federal Reserve.
In recent years, legislation to remove capital gains taxes currently assessed on the sale of the monetary metals progressed through several state legislatures – Wyoming and Arizona were the last two states to remove income taxes from constitutional money. In recent years, the Idaho House has heard and overwhelmingly passed legislation to remove income taxes currently assessed on the monetary metals. The Idaho Senate ought to be the next.
Here are a few reasons why slapping an income tax on the monetary metals is wrong:
- Current Idaho law assesses taxes on imaginary gains. Under current law, a taxpayer who sells precious metals may end up with a capital “gain” in terms of Federal Reserve Notes. This capital “gain” is not necessarily a real gain, it’s often a nominal gain that results from the inflation created by the Federal Reserve and the attendant decline in the dollar’s purchasing power.
Yet this nominal gain is taxed at the federal level – and, because Idaho uses federal adjusted gross income (AGI) as a starting point for Idaho income calculations, this nominal gain is taxed again by Alabama.
- Inflation harms the poorest among us. Inflation is a regressive tax. The hardest hit are wage earners, savers, and pensioners on fixed incomes – as well as those who own few or no tangible assets.
- HB 602 is a tax neutral measure – it excludes any gains OR losses on the monetary metals. Investments in precious metals coins and bullion are rightly exempt from Idaho's sales tax. Neutralizing Idaho's income tax treatment of the monetary metals would remove the last major disincentive in Idaho that stands against the ownership and use of the monetary metals.
This legislation would simply cause taxpayers to back out any “gains” OR “losses” on gold and silver that were reported on their federal returns. Idaho would assume a neutral stance as to taxation of the only form of money mentioned in U.S. Constitution.
This measure is one of many sound money bills being introduced across the country this year. Recently having removed all taxes on gold and silver, Wyoming plans to consider a measure to empower the state treasurer to hold physical gold and silver in state coffers. Several bills to remove taxation on sound, constitutional money are also being, or have been, introduced in Tennessee, Hawaii, South Carolina, Idaho, and Mississippi.
Backed by the Sound Money Defense League, these measures protect Idaho citizens by removing barriers to insulating their wealth with the only money proven to protect against the Federal Reserve Note’s ongoing devaluation.