Legislation introduced to recognize gold, silver as U.S. currency
(Kitco News) - Gold and silver are well established as stores of wealth, but the precious metals face complex challenges when it comes to being recognized as a valid currency. However, one U.S. politician is hoping to change that with new legislation.
Tuesday, U.S. Representative Alex Mooney (R-WV) introduced the Monetary Metals Tax Neutrality Act (H.R. 2284) bill in the House. According to the bill, the proposed legislation would remove capital gains, losses, or any other type of federal income calculation on gold and silver bars and coins. The legislation would effectively recognize gold and silver as forms of currency.
Under current laws, the Internal Revenue Service regards gold and silver as capital assets. It classifies them as "collectibles," which means they are subject to capital gains taxes. After selling their bullion, gold investors could potentially be taxed at the maximum collectible capital gains rate of 28%. The tax only applies when investors sell their gold or silver.
"My view, which is backed up by language in the U.S. Constitution, is that gold and silver coins are money and are legal tender," Rep. Mooney said in a press release. "If they're indeed U.S. money, it seems there should be no taxes on them at all. So, why are we taxing these coins as collectibles?"
According to the proposed legislation, the Monetary Metals Tax Neutrality Act states that "no gain or loss shall be recognized on the sale or exchange of (1) gold, silver, platinum, or palladium minted and issued by the Secretary at any time or (2), refined gold or silver bullion, coins, bars, rounds, or ingots which are valued primarily based on their metal content and not their form."
The proposed legislation is supported by the Sound Money Defense League, a national public policy group that works to promote gold and silver as recognized currency in the U.S.
"Inflation is a regressive tax that especially harms wage earners, savers, and retirees on a fixed income," said Jp Cortez, policy director at the Sound Money Defense League, in a prepared statement. "We are encouraged to see legislation targeting the evils of the Federal Reserve System."
The federal bill comes as some state governments look to recognize gold and silver as legal tender and remove capital gains Taxes. Arizona removed state capital gains taxes on silver and gold in 2017.
In February, the Idaho House of Representatives passed a bill that would enable the State Treasurer to protect state reserve funds from inflation and financial risk by holding physical gold and silver.
The Idaho bill still needs to be passed by the state's Senate.