The Sound Money Showdown in U.S. States

by
Jp Cortez
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Policies relating to sound money have been the subject of substantial debate at the state level this year, with bills, hearings, and/or votes taking place in nearly a dozen legislatures.

As most state legislatures have now wrapped up their work for the year, let’s review the victories (both offensive and defensive)—and lone defeat—for sound money during the 2019 session.

The Sound Money Defense League’s primary goal is to remove every kind of taxation imposed on constitutional money. Given its practical importance, the hottest issue in the states has been taxation—i.e. whether citizens should face a levy when buying or selling gold and silver.

• House Bill 2684, introduced by West Virginia Delegate Pat McGeehan, aimed to remove all taxes (sales tax, corporate income tax, and personal income tax) from gold and silver. Meanwhile, Senate Bill 502, sponsored by Senator Craig Blair, exempted only precious metals from the state’s sales tax.

The West Virginia bill removing sales taxes passed overwhelmingly through both chambers, and Governor Jim Justice signed SB 502 into law.

• House Bill 2140, introduced by Kansas Representative Jim Kelly, included a sales tax exemption on the sale of gold and silver as part of a larger bill rife with new taxes. Governor Laura Kelly signed the measure in May.

• Since 2014, Nebraska has recognized gold and silver as money and waives sales taxes on the metals. However, a few tax-revenue-hungry politicians tried to sneak a new sales tax on the metals into a larger bill earlier this year. After sound money advocates and in-state supporters mobilized to persuade Nebraska legislators that taxing money is wrong, the cynical new tax was removed from the bill.

• Washington State has not collected sales taxes on sound money for more than three decades. This year, however, we faced two serious attacks on gold and silver in Olympia.

Jp Cortez, policy director of the Sound Money Defense League, joined Dan Duncan and other in-state dealers and policy experts to warn legislators of the grave policy error they were considering—a blunder that would drive coin conventions and investment dollars to neighboring states.

After overwhelming backlash from in-state coin dealers, grassroots supporters, and the Sound Money Defense League, both Washington repeal bills died in committee.

• The battle to preserve an existing sales tax exemption did not succeed in Ohio. Under the dark cloud left by a rare-coin scammer who stole tens of millions of dollars from Buckeye State taxpayer a decade ago, the legislature ignored the pleas of hundreds of taxpayers, business owners, and collectors and revoked the sales-tax exemption for gold and silver.

We’re disappointed in this setback at the hands of tax-hungry politicians. Any tax-revenue proceeds Ohio gains will almost certainly be offset by lost revenues when business and coin conventions flee the state. The Sound Money Defense League hopes to persuade Ohio’s legislature to rectify this policy error in the future.

• Wisconsin is still considering Assembly Bill 200, introduced by Representative Shae Sortwell. This bill aims to remove sales taxes from gold and silver and should be heard in the fall.

• Several other states, including Arkansas, Maine, Minnesota, and Tennessee, actively considered measures to remove sales taxes on sound money—with formal hearings occurring in all but Minnesota. Although these efforts came up short this year, a foundation of support has been established for renewed efforts next year.

In total, 39 states now have full or partial exemptions from sales taxes on the monetary metals.

• Sound money allies in Wyoming introduced three bills to enable the state treasurer to invest state funds in physical gold and silver held securely in or near the state.

These measures ignited a discussion as to whether the state treasurer already has the authority to protect state funds by holding gold—and it put a spotlight on Wyoming’s staggering losses on its investments in Third-World debt (hundreds of millions of dollars lost) while having now ownership in even a single ounce of gold.

While these Wyoming bills did not pass, the Wyoming state treasurer is reportedly exploring how best to incorporate gold into the state’s portfolio to protect its reserves.

• An ally in Arizona introduced a similar bill to Wyoming’s, but the sunbelt state does not currently have reserve funds which can be allocated to the monetary metals – the state’s modest reserves have been pledged as collateral for bank loans on government buildings.

Sound money is no longer a fringe concept relegated to whispers in dark corners. The Federal Reserve has failed as a steward of the dollar since its creation. Individuals, state legislatures, and even other countries are waking up to the value and importance of sound money.

Grasping the importance of sound money and seeing success at the state level, our allies are expected to introduce additional sound money measures next session. Building on the success of 2019, all eyes are on 2020 as sound money continues to gain acceptance once again.