I came across this tonight while doing my routine research on markets and found it interesting. I wanted to get other people's thoughts on this... and primarily thoughts on why this is something that is being done at the state level and not at the Federal Reserve level. http://www.dailysilvernews.com/gold-and-silver-legal-tender-in-az-legislature-approves-bill/2681/
Assuming it's similar to what Utah did, it just means you can pay your taxes in gold/silver to the state.
I find it funny how they decided to use BRASS coins in the picture.. coins that are actually legal tender.
I also found it pretty funny that they say pay with gold and then show coins that don't have any gold in them what so ever.
Its "money" but: 1. Only if merchant agrees to take it 2. "No set monetary value" States can do what they want, I am just worried. They say in some of these states they can pay their taxes with PM, well are they going to have experts there to make sure of the purity of the metal, check daily prices, etc? Who is going to stop the state from accepting chinese fake Maple leaves? I am not psychic, but for some reason I see a major scandal brewing in the future regarding these PM laws. Why does there have to be a law? Why can't people, if they wish to be on a "gold standard", BUY GOLD. You know, convert your cash to gold, and sell enough for USD to buy what you want to buy. No law needs to be passed for YOU to make your own "gold standard".
Instead, they should just remove the regulation of gold and silver as property. That way people could first convert to USD without paying income or capital gains tax.
So, is that where it ends? Would platinum not be PM as well? Palladium? If you are giving special treatment to them, why not copper and lead? I hold land as a contra asset, why not it? Its a slippery slope. What you are proposing would greatly benefit a few industries like jewelry and silverware, or are you only talking about raw gold and silver? If only raw PM, then our coins don't count. If they do count, do ALL coins with PM now free from capital gains, like a flowing hair silver dollar or a 1792 half disme? I think other collectible fields might be pretty darn PO'ed if coin collectors got such a huge tax break. See what I mean. A whole lot of details to work out for such a proposal.
They could remove tax on anything above x% of gold or silver where the premiums are under x% to obtain. So the 1792 half dime would not be included. For example, jewelry priced at 5% over spot could be. Platinum and Palladium are nearly entirely an industrial metal so that wouldn't be included. Or unless maybe in bullion form? They did something similar in Dubai. But I do see the bias that this would create.
Actually just with each other. in the case of the AZ bill the state specifically exempted the state from having to accept the gold or silver. Probably because the Constitution says that the states can't make anything other than gold or silver a legal tender. So because of the Constitution they CAN'T make Pt or Pd or Cu, or Pb and so on, legal tender.
So where would the dividing line be? If I sold a coin made of gold, since its "legal tender", is any profit I made from holding it tax exempt from Cap Gains taxes? If it is, where is THAT LINE. Does it apply to junk silver, ASE's, VF Barbers, half dismes?
From what I vaguely recall, coins aren't eligible for cap gains treatment, since they're viewed as collectibles.
I think it's a monumental waste of legislative time, much like it was in Utah. The people this might benefit are those anti-government communities, which there are a ton of in Arizona, probably like most ultra conservative states, yet these are the same people who don't pay taxes now, so they sure won't be paying them with gold and silver. Stupid, stupid, really stupid. Guy
From what I see in the AZ bill yes it would be exempt as far as state taxes go. Federal taxes are another matter. Different government different laws.
