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Lawmakers: All that glitters shouldn’t be taxed

gold-coin

Want a way to avoid taxes on your capital gains?

State lawmakers gave final approval to legislation today providing a way to do just that. But it remains unclear whether Gov. Doug Ducey is willing to go along.

Arizona law says if someone invests in something, whether art, collectible cars or commercial real estate, and then sells it for more than the cost, that difference is subject to state income taxes.

What HB2014 seeks to do is carve out an exception when people invest in gold and silver coins produced by the U.S. Mint.

But Rep. Mark Finchem, R-Oro Valley, said this isn’t some tax scam.

He said it reflects his belief that the purchase of gold and silver coins with federal reserve notes – those dollar bills now printed by the government – is simply an exchange of one form of currency for another. Finchem said that would be like taxing someone for exchanging two dimes and a nickel for a quarter.

What’s really behind this, though, is a particular political philosophy that those dollar bills are not worth anything.

“Yes, we still exchange it,” Finchem said. “But we pretend it actually has some value.”

What has real value, Finchem said, are coins with precious metals.

To his way of thinking, if someone buys a $50 one ounce gold coin, selling Wednesday from the U.S. Mint web site at $1,354.95, and then sells it next year for some higher figure, that person has not experience a capital gain.

What’s happened, he said, is the value of those government-issued dollar bills has dropped.

Put another way, everyone else who has dollars in their pocket has experienced a loss in the value of their money. It is only the person who bought the gold coins who has stayed even.

And that, he contends, makes it unfair to tax the difference.

The Senate vote – the House had approved it earlier – sends the measure to Ducey.

In 2015, the governor vetoed a similar measure, which would have required the state to recognize gold and silver coins as legal currency.

“After reviewing this bill in detail, I do not believe this policy is appropriate at this time,” Ducey wrote in his two-line veto.

Another version was vetoed by the governor last year.

Finchem told Capitol Media Services he believes HB2014 is sufficiently different, dealing not with the question of what the state recognizes as money but simply with the tax issue.

But the question of providing special tax breaks has always been a part of the discussion.

In 2013, then-Gov. Jan Brewer vetoed similar legislation over concerns that the language might exempt the state from collecting income taxes on such transactions.

“This would result in lost revenue to the state, while giving businesses that buy and sell collectible coins or currency originally authorized by Congress an unfair advantage,” she wrote at the time.

6 comments

  1. Bill in Montgomery

    Thanks for this story. For what it’s worth, I live in Alabama but now have the state of Arizona on my radar as a place for our family to move if the you-know-what hits the fan (which I think is inevitable).

    The legislature of Arizona should be commended for passing this legislation. Historically, gold and silver have been the ultimate “real money.” Our Founders even endorsed them as money. The paper (or digital) “fiat” currencies we all exchange are backed by nothing but the “full faith and credit” of the U.S. government.

    Now it’s true that the line of “credit” the U.S. government relies on is seemingly infinite. America simply prints “money” as it needs it, which is all the time. At some point, the 24-7 operation of this printing press will crash. Other nations will either quit buying our debt or switch to currencies that are perceived to be safer – probably those at least partially backed by something real (which gold and silver are). At that point, people who put as much as their wealth in gold and silver will be protected. In the simplest explanation, gold and silver are an insurance policy against the collapse of the purchasing power of pretty, green paper.

    As this article notes, the purchasing power of these dollars is declining every year and has been for a century. People just seem to accept this for some reason and offer no complaints. Arizona would seem to be the leader in the effort to prepare for the inevitable day when the fiat dollar is rejected as the “world’s reserve currency.” As more people realize this, I do think more Americans who believe in “Constitutional money” will want to move to your state.

    Now let’s see if the governor signs this bill into law. My guess is that the Establishment or “Powers that Be” are pressuring him to veto a law that would threaten the “status quo.”

  2. it’ll never happen. the governor is a puppet of the deep state and will veto.

  3. If we can get Trump to push the ‘JFK Executive Order” button to eliminate the Bank Credit System, The Federal Reserve System, all of this ‘money fraud’ can be eliminated.
    In the meantime,
    Money out of Banks into Credit Unions

  4. Bill in Montgomery you are 100% correct.

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