Taxes on Precious Metals and Legal Tender Status as the Solution
Many may not be aware that precious metals from a federal viewpoint are considered a capital asset by the IRS and most States view them as this as well. Why this matters is that it means when one goes to sell their precious metals they may be subject to taxes as high as 28% at the federal level and additional taxes at the State level. Don’t be surprised if those living in more anti-Constitutional areas see even local taxes accessed, as these anti-Patriot forces are becoming bolder and more hateful and punitive towards anyone who disagrees with them (the majority).
As we have explored in prior writings, the Federal Reserve Bank and its partner corrupt organizations, far too many to list in this writing, benefit heavily from the fiat money system and the power and control that it enables them and their friends to exert on nearly all aspects of society. Gold and silver, much like cryptocurrencies and other alternative assets, act as competition for demand for the USD and other fiat currencies, and ones where the central banks, the government, and their friends have less control over these alternative currencies and therefore despise them. Additional issues at the State level include sales taxes being applied to precious metals, something certain States that are more anti-tax and pro-Constitutional money are slowly moving against. One of the solutions around this taxation issue is for governments to recognize gold and silver as legal tender and to treat it no differently than it currently treats its fiat garbage currency they effectively force us to use. It is important to note that this would simply be a return to the status of gold and silver from the past and in fact the status quo in most of the Western world going back to the Ancient Greeks.
Legal tender is a legal concept of money that by contract or law must be accepted by parties in the settling of debts and the exchange of goods. The delineation between contract or law is important as some States that have made movements towards pro-precious metals laws have first made the step of protecting gold and silver contracts with the hope that full legal tender status is to be later conveyed. If gold and silver are officially considered legal tender, not only in contracts but by default, then they can be legally enforceable in transactions and avoid taxation when sold or exchanged for a different currency or when utilized to purchase goods or services. While the coins produced by the U.S. Mint are considered legal tender, they are issued as legal tender values far lower than the actual market value of precious metals and therefore there is no incentive to utilize them as legal tender at those values. While there has been a movement growing to reduce or eliminate sales taxes on precious metals, allow contract law for precious metals, and establish limited legal tender status for precious metals with arguably stringent requirements in certain States, the complete and total status of legal tender for precious metals has yet to be returned to.
At the State level, Utah, Texas, and Louisiana have all been heading in the right direction with pro-precious metals laws passed and West Virginia, Wyoming, Arizona, Kansas, Oklahoma, Indiana, Missouri, Louisiana, Tennessee, and South Carolina all either passed less aggressive pro-precious metals laws or have or are attempting to do so. There are a lot of nuances to each State’s laws or attempted laws and Bullion TP recommends each citizen research the laws in their respective States. At the Federal level, in March 2021 Representative Alex Mooney (R-WV) introduced the Monetary Metals Tax Neutrality Act (H.R. 2284) to remove capital gains, losses, or any other type of federal income calculation on gold and silver bars and coins. This legislation would effectively recognize gold and silver as legal tender. This proposed legislation has of course gone nowhere with the current political party and RINOS on the other side entrenched in power who are basically all bought and paid for puppets for the Federal Bank and Oligarchs.
Analysis: Precious metals investors, including the fast growing Silver Patriots and/or Silver Apes, must demand a return to treating precious metals as legal tender at both the Federal and State levels for both their own self interest and in the interest of monetary truth and fairness. First, the treatment of the truest and oldest form of money should not be discriminated against on a taxation basis in comparison to junk fiat currency. Patriots should not be forced to pay a tax to exchange their real money for fiat or any legitimate hard asset or service they purchase from another company or individual. There should be an equality of currencies at best, although the complete abolishment of fiat should be the longer term goal.
In addition, these taxes act as a disincentive to both invest in and then later sell precious metals or use it as money as nearly all transactions in most areas could be considered taxable events. Sales taxes on precious metals are a particularly heinous abomination considering their historical usage as money in nearly every advanced society in the world. Sales taxes on precious metals are effectively an exchange rate tax to discourage movement into them from fiat currencies. Much like most of the other evolving issues of the day, it is up to us precious metals investors to demand equal treatment under the law for our chosen Constitutional store of wealth, gold, silver and other precious metals. The corrupt powers-that-be are certainly not going to do it for us.