3 votes

Modest proposal to backdoor alternative currencies.

The main thing keeping us from just using gold or silver as a de-facto hard currency is the capital gains tax. I won't go into the details of all the ways this hurts us. But it seems to me there's a legislative quick-fix that might be sneaked through:

- Designate either silver or gold to be the standard of value.

- Index the purchase and sale prices of investments subject to capital gain taxes in terms of the spot price of the selected metal.

This would:

- Eliminate capital gains tax on the designated metal.

- Eliminate the inflation penalty on all buy-hold-sell investments (including the other money-metal).

- Eliminate the legal and practical roadblocks to using the metal (or any other commodity) as a defacto alternative currency (by denominating contracts in a weight of the metal or quantity of the asset, satisfying the legal tender laws by allowing the substitution of its equivalent in currency at the spot price.)

Devil's in the details. Possible legislation might be something like this:

- The purpose of this section is to index capital gain taxation to a constitutionally authorized commodity metal in order to avoid overtaxation due to inflation and to eliminate legal impediments to the use of commodities as defacto alternative currencies.

- For the purposes of computing capital gains and losses, a "reference commodity" shall be defined as either gold or silver, as designated from time to time by congress.

- Silver is initially designated as the reference commodity.

- In exchanges of the reference commodity for United States currency, the reference price shall be the price of the commodity in the trade.

- For all other trades the Internal Revenue Service shall, by appropriate rule making, define a method for computing a "reference price" for the reference commodity. This shall be a reasonable measure of the reference commodity's substantially current price in US currency on a designated exchange operating under United States jurisdiction and law and it shall be easily computed by traders in time to be known when they make trading decisions in any other commodity, using publicly available current and historical market information.

- Until such rules have been made and take effect, the "reference price" of a reference commodity shall be the previous trading day's closing price for the commodity on the New York Mercantile Exchange.

- For the purposes of capital gain or loss taxation, the gain or loss in US currency shall be indexed by the change in the reference price of the reference commodity. The computation shall be as follows:

- If the reference commodity is the same at the time of the purchase and the sale, the gain or loss in dollars shall be multiplied by the reference price at the time of the purchase and the result divided by the reference price at the time of the sale.

- If the reference commodity is different at the time of the purchase and at the time of the sale, the computation shall be made separately with each of the reference commodities and the result used which is more favorable to the taxpayer.

- For assets held when this section goes into effect the reference commodity shall be the reference commodity at the time of the sale.

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H.R. 5427

This Bill called the "Tax-Free Gold Act of 2008" was introduced by Ron Paul on February 13, 2008. http://thomas.loc.gov/cgi-bin/query/z?c110:H.R.5427:

Dr. Paul has introduced a number of monetary Bills during his time in Congress:

http://en.wikipedia.org/wiki/Ron_Paul_legislation#Sound_mone...

"Jesus answered them: 'Truly, truly, I say to you, everyone who commits sin is a slave to sin. The slave does not remain in the house forever; the son remains forever. So if the Son sets you free, you will be free indeed.'" (John 8:34-36)