Arizona Recognizes Gold, Silver Bullion As Legal Tender But More Work Needs To Be Done
(Kitco News) - Citizens of Arizona who believe in the value of hard currencies won a strategic victory earlier this week as Governor Doug Ducey signed a law that eliminated capital gains taxes on gold and silver bullion.
However, one proponent of recognizing gold and silver as legal currency warned that although momentum for this goal is building, there are still a lot of hurdles left to overcome.
“It has taken a lot of years to get here but we are definitely growing popularity in this movement,” said Keith Weiner, president of the Gold Standard Institute USA, and CEO of Monetary Metals, in an interview with Kitco News.
This is the fourth time that this type of legislation has been passed by the State legislature. Similar bills in 2013, 2015 and 2016 were voted in by then-Govenor Jan Brewer and Ducey.
Weiner said that one of the reasons why he suspects Ducey signed this piece of legislation is because it specifically targets capital gains on bullion gold and silver. “I think this appealed to Ducey because he wants to reduce taxes and has wanted to eliminate capital gains taxes. This gives him the opportunity to be a leader in this movement,” he said.
The legislation specifically eliminates state capital gains taxes on income “derived from the exchange of one kind of legal tender for another kind of legal tender.” At the same time, the law defines legal tender as: “a medium of exchange, including specie that is authorized by the United States Constitution or Congress for the payment of debts, public charges, taxes and dues.” Specie is described as coins having precious metals content.
While Arizona is the first state to pass this type of legislation, Ohio and Idaho are also taking similar steps. While Idaho’s legislature has passed the bill it has not yet been signed into law by the Governor Clement Leroy "Butch" Otter.
Weiner noted that while the movement to recognize gold and silver as legal tender is growing at the state level, the biggest hurdle comes at the Federal government, which has its own capital gains taxes. Unless that is eliminated, he said, it will be difficult to use gold and silver as a currency, competing with the U.S. dollar.
He likened this movement to the legalization of marijuana. “The support at the state level to legalize marijuana is fairly clear but we have a new Attorney General that wants to wage a new war on drugs, so it is difficult to see how this movement will progress,” he said.
Although recognizing gold and silver bullion as legal tender is a step in the right direction, Weiner said that a bigger “game changer” to recognize gold as a hard currency is if Arizona create a gold-backed bond.
Weiner was part of a committee that looked at this issue last year. He added that the committee has wrapped up and has now passed its recommendations on to the state legislature to craft a bill. The proposal would be to create a state bond that is backed and redeemable in gold.
“A gold-backed bond would be a game changer because it would recognize gold as a credit instrument,” he said. “People will definitely look at gold differently if it can be a yield-bearing asset.”
Weiner said that he is not surprised to see Arizona as a leader in the movement. He added that the State is known for being fiscally conservative and there is growing resentment over the way the Federal government continues to add to its growing debt.
“There are lot of people who don’t agree with the way the Federal government spends and it comes down to whether you want to own the dollar or physical gold,” he said.