Alabama has recently decided to exempt transactions involving gold and silver from taxes. This move places Alabama among the growing number of states that officially recognize gold and silver as legal tender. In recent years, there has been a significant increase in the number of states adopting similar measures. This trend aligns with a growing distrust in the Federal Reserve and a declining confidence in the value of the U.S. dollar. As more people question the stability and value of the dollar, they are turning to gold and silver as more reliable stores of value.
Just recently, Nebraska made headlines by passing a law that exempts gold and silver transactions from taxes. Shortly after this announcement, Alabama followed suit, indicating a broader movement among states. Governor Kay Ivey of Alabama signed Senate Bill 297 (SB 297) into law. What makes this legislation particularly noteworthy is that it received support from both Republicans, who hold the majority in Alabama's state legislature, and Democrats. This bipartisan support is significant because it highlights a rare moment of agreement across party lines on the issue of monetary policy and fiscal protection of precious metals.
The support from Democrats is especially interesting because this party often views efforts to protect precious metal transactions fiscally as potentially harmful to tax revenues. Democrats typically consider gold and silver to be outdated and not in line with modern economic practices. They argue that these measures could reduce the amount of tax revenue available for public services and infrastructure. However, in this case, Democrats in Alabama have recognized the potential benefits and agreed to support the bill.
On the other hand, Republican politicians, particularly at the state level, have a different perspective. They emphasize the traditional role of gold and silver as outlined in the U.S. Constitution. Republicans generally oppose excessive government spending and the practice of quantitative easing, which involves increasing the money supply to stimulate the economy. They argue that these policies can lead to inflation and reduce the value of the dollar. For Republicans, gold and silver offer a safeguard against these negative effects, providing a stable and reliable store of value.
While it might seem like a minor detail to some, the abolition of taxes on gold and silver transactions is quite significant. This is not only because of the amount of tax revenue involved but also because taxing these transactions effectively prevents gold and silver from being used as a medium of exchange in everyday transactions. By removing the tax, Alabama is making it easier for people to use gold and silver in daily commerce, which could increase their use as alternative forms of money.
The new law specifically removes capital gains taxes on the sale, purchase, or exchange of gold and silver. This means that any profits made from these transactions will not be counted towards the taxpayer's adjusted gross income. This is a crucial change because if these profits were classified as capital gains by the IRS, they would be subject to additional taxes. This tax burden places gold and silver at a disadvantage compared to other forms of payment, such as cash or digital transactions, which do not face the same tax implications.
Critics of the law argue that the true intent is to discourage the use of any form of money other than government-issued paper currency. They believe that taxing gold and silver transactions is a way to ensure that people continue to rely on the dollar. However, economic trends cannot be easily controlled through administrative measures. As the Federal Reserve continues to print more dollars without corresponding increases in value, the inherent worth of paper currency diminishes. This inflationary pressure makes gold and silver more attractive as stable alternatives.
This growing devaluation of the dollar, combined with increasing distrust in federal monetary authorities, is leading both individuals and states to seek alternatives to the dollar. According to the U.S. Constitution, states are permitted to establish gold and silver as legal tender. Historically, states have avoided interfering in federal monetary matters, but this stance is changing. With the current economic climate, more states are beginning to exercise their constitutional right to recognize gold and silver as money.
For most of American history, the reliance on a strong, gold-backed dollar provided a sense of security and stability. However, with the Federal Reserve now issuing record amounts of banknotes, more states are taking advantage of the option to exempt precious metals from fiscal burdens. As of now, 13 states in the USA – more than a quarter of the country – have enacted laws that exempt gold and silver from taxes. This shift indicates a significant move towards alternative forms of currency and a growing skepticism about the long-term stability of the dollar.
23.05.2024
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