Tax-Free Gold Act

[LPC]

Rep. Ron Paul has introduced new legislation (H.R. 5427) that reads in its entirety as follows:

SECTION 1. SHORT TITLE.

This Act may be cited as the "Tax-Free Gold Act of 2008".

SEC. 2. NO TAX ON CERTAIN COINS AND BULLION.

(a) In General. -- Notwithstanding any other provision of law --

(1) no tax may be imposed on (or with respect to the sale, exchange, or other disposition of) any coin, medal, token, or gold, silver, platinum, palladium, or rhodium bullion, whether issued by a State, the United States, a foreign government, or any other person, and

(2) no State may assess any tax or fee on any currency, or any other monetary instrument, which is used in the transaction of interstate commerce or commerce with a foreign country, and which is subject to the enjoyment of legal tender status under article I, section 10 of the United States Constitution.

(b) Effective Date. -- This section shall take effect on December 31, 2008, but shall not apply to taxes or fees imposed before such date.

Anyone have any idea as to what he thinks he's doing?

For example, what kind of tax is he talking about? Sales tax? Income tax? Estate tax? Gift tax?

[Joey Smith]

Anyone have any idea as to what he thinks he's doing?

The very same thing that Ron Paul has been doing for years: Pandering for contributions.

Ron Paul has absolutely no substance and doesn't even believe in 10% of the crap that he talks about, but he takes extreme positions so that the wackos out there will send him FRNs. By and large, it has worked, and he's built up a nice campaign war chest that will significantly supplement his retirement in future years.

[The Operative]

Rep. Ron Paul has introduced new legislation (H.R. 5427) that reads in its entirety as follows:

SECTION 1. SHORT TITLE.

This Act may be cited as the "Tax-Free Gold Act of 2008".

SEC. 2. NO TAX ON CERTAIN COINS AND BULLION.

(a) In General. -- Notwithstanding any other provision of law --

(1) no tax may be imposed on (or with respect to the sale, exchange, or other disposition of) any coin, medal, token, or gold, silver, platinum, palladium, or rhodium bullion, whether issued by a State, the United States, a foreign government, or any other person, and

(2) no State may assess any tax or fee on any currency, or any other monetary instrument, which is used in the transaction of interstate commerce or commerce with a foreign country, and which is subject to the enjoyment of legal tender status under article I, section 10 of the United States Constitution.

(b) Effective Date. -- This section shall take effect on December 31, 2008, but shall not apply to taxes or fees imposed before such date.

Anyone have any idea as to what he thinks he's doing?

For example, what kind of tax is he talking about? Sales tax? Income tax? Estate tax? Gift tax?

This is just a WAG, but it appears that under Sec. 2(a)(1), he is trying to eliminate sales taxes on the sale of precious metals. However, the wording is so vague that it could be interpreted to mean all other types of taxation when a precious metal is used as the medium for exchange.

Sec. 2(a)(2) basically would eliminate any state taxation whatsoever, except for those whose earnings were derived from within the state itself.

However, it also appears from the wording that this is another attempt from Rep. Paul to pass legislation that might support the liberty dollar. Notice the reference to Article 1 Section 10 of the U.S. Constitution. It is Ron Paul's belief that that particular section says that only gold and silver can be used as legal tender. He completely ignores the fact that section begins with "No State" which makes it a limitation on the states and not on Congress.

[RyanMcC]

Anyone have any idea as to what he thinks he's doing?

1) Removing obstacles to allowing competing currencies.
2) Trying to sell his coin collection and retire.

For example, what kind of tax is he talking about? Sales tax? Income tax? Estate tax? Gift tax?

Capital gains and Sales tax.

Sec 2(a)(1):

The final step to ensuring competing currencies is to eliminate capital gains and sales taxes on gold and silver coins. Under current federal law, coins are considered collectibles, and are liable for capital gains taxes.

Sec 2(a)(2):

Just as pernicious are the sales and use taxes which are assessed on gold and silver at the state level in many states.

Source: http://www.lewrockwell.com/paul/paul434.html - February 13, 2008

He completely ignores the fact that section begins with "No State" which makes it a limitation on the states and not on Congress.

He acknowledges the limitation is on states and not congress.

"However, there is nothing in the Constitution that grants the Congress the power to enact legal tender laws."

Article I Section 10 of the Constitution forbids the States from making anything but gold and silver a legal tender in payment of debts. States are not required to enact legal tender laws, but should they choose to, the only acceptable legal tender is gold and silver, the two precious metals that individuals throughout history and across cultures have used as currency. However, there is nothing in the Constitution that grants the Congress the power to enact legal tender laws. We, the Congress, have the power to coin money, regulate the value thereof, and of foreign coin, but not to declare a legal tender. Yet, there is a section of US Code, 31 USC 5103, that purports to establish US coins and currency, including Federal Reserve notes, as legal tender.

[The Operative]

He completely ignores the fact that section begins with "No State" which makes it a limitation on the states and not on Congress.

He acknowledges the limitation is on states and not congress.

"However, there is nothing in the Constitution that grants the Congress the power to enact legal tender laws."

Article I Section 10 of the Constitution forbids the States from making anything but gold and silver a legal tender in payment of debts. States are not required to enact legal tender laws, but should they choose to, the only acceptable legal tender is gold and silver, the two precious metals that individuals throughout history and across cultures have used as currency. However, there is nothing in the Constitution that grants the Congress the power to enact legal tender laws. We, the Congress, have the power to coin money, regulate the value thereof, and of foreign coin, but not to declare a legal tender. Yet, there is a section of US Code, 31 USC 5103, that purports to establish US coins and currency, including Federal Reserve notes, as legal tender.

Ok, I had not read that statement from Ron Paul. I referred to an earlier statement he made to Congress.

Mr. Speaker, I have for several years come to the House floor to express my concern for the value of the dollar. It has been, and is, my concern that we in the Congress have not met our responsibility in this regard. The constitutional mandate for Congress should only permit silver and gold to be used as legal tender and has been ignored for decades and has caused much economic pain for many innocent Americans. Instead of maintaining a sound dollar, Congress has by both default and deliberate action promoted a policy that systematically depreciates the dollar. The financial markets are keenly aware of the minute-by-minute fluctuations of all the fiat currencies and look to these swings in value for an investment advantage. This type of anticipation and speculation does not exist in a sound monetary system.

Source: http://www.ronpaullibrary.org/document.php?id=698

I interpreted that to mean that he believes that Congress can only establish silver and gold as legal tender. However, even if he believes that Congress does not have the power to establish a legal tender and that power only belongs to the states, what makes him think the states will properly act on that power? Should the U.S. go back to the time when banks issued bank notes for the private gold and silver that had been deposited with them? Does he realize how many banks issued their own notes and the states did nothing about it?