The bill, SB1439 would make U.S.-minted gold and silver coins and bullion legal tender “beginning in mid-2014, joining existing U.S. currency.” Had Governor Brewer signed the bill into law, Arizona would have become the second state in the Union to establish these precious metals as legal way to take payment. If one pays a merchant who accepts gold or silver, how are state taxes reported, and collected? The serious use of metals as money would only threaten tax revenues if the prior coordination and tax treatment Brewer cited are first settled—she says the bill is vague and unclear whether or not the coins are exempt—and that only if the bill were to be left in this state, would “result in lost revenue to the State, while giving businesses that buy and sell [approved coins] an unfair tax advantage.”
Clean up whether or not “collectable coins” are even included in the bill, and tax advantaged exchange between dollars and U.S.-minted legal tender is limited to the money (gold, silver), and not other coins and collectables.
Utah, as forerunner of this legislation, approved a similar bill in 2011, becoming the first state to officially revert to this “dual-monetary system.” How did their bill treat taxation? [Read the letter in full below.]
State Senator Chester Crandell has previously maintained that “the ability to use gold and silver in everyday life in the state is still a ‘work in progress,’” and that more work may be needed to make the bill viable. The bill enjoyed good majorities in both houses.
Democratic State Senator Steve Farley, however, has recently stood up for limiting the freedom of choice for Arizona’s citizens, saying that passing such a bill could create “massive problems for businesses in the state.”
Massive problems? Such as recording transactions, and paying tax, two things businesses already do? If businesses choose want to take on the same responsibilities in gold and silver terms--that should their free choice. There is no obligation, nor is the State burdened by the desires of the vast, and represented majority to simply have options.
The state will act according to the will of its citizens, and if businesses and individuals want a better bill that can estimate State tax consequences, it seems this is what Governor Brewer will give them. Let’s take a look at how net tax revenues would actually be significantly improved, by not exempting money (gold and silver). Cost of collection may surprise, as it is always the taxes to which one agrees that are least likely to be avoided.
Governor Brewer has done a great service in preparing other bill writers and legislators. The veto letter is fairly balanced, and wise, as the bull-market in legal tender bills hitting State house has only just begun.
