by Peter Schiff, Schiff Gold:
Earlier this week, the Texas Senate gave final approval to a pair of bills that that would exempt precious metals stored in the Texas Bullion Depository from certain taxes. By repealing taxes on gold and silver, the state will treat them more like money instead of commodities.
Rep. Giovanni Capriglione (R-Keller) introduced House Joint Resolution 95 (HJR95) on March 1. The resolution places a state constitutional amendment authorizing the legislature to “exempt from ad valorem taxation precious metal held in a precious metals depository located in this state,” on the November ballot. Ad valorem taxes are levied on personal property.
With Senate approval, the proposed amendment will now go before the voters in November.
House Bill 2859 (HB2859) is the enabling legislation for the amendment. Under the proposed law, “Precious metals are exempt from taxation if they are held in a commercial depository in this state.” If signed by Gov. Greg Abbott, the law will go into effect upon approval of the constitutional amendment.
Final passage of the constitutional amendment along with the governor’s signature on HB2859 would represent another step forward in facilitating sound money in Texas.
Gov. Greg Abbot signed a law creating a state gold bullion and precious metal depository in the summer of 2015. The depository received its first deposits last summer.
Countries that stockpile gold create a foundation of stability for their monetary systems. This is precisely why gold purchases by central banks hit their highest level since 2008 last year. But it’s not just countries looking to gold to provide political clout and economic power. The creation of the Texas Bullion Depository does the same thing for the state. It sets a foundation to wrest some economic power from the Federal Reserve by bringing a modicum of monetary autonomy to the Lone Star State.
In his signing statement, Abbot emphasized the autonomy the new facility will provide the state.
…the Texas Bullion Depository will become the first state-level facility of its kind in the nation, increasing the security and stability of our gold reserves and keeping taxpayer funds from leaving Texas to pay for fees to store gold in facilities outside our state.”
University of Houston political science professor Brandon Rottinghaus said a state depository can serve a similar function for Texas.
“This is another in a long line of ways to make Texas more self-reliant and less tethered to the federal government. The financial impact is small but the political impact is telling, Many conservatives are interested in returning to the gold standard and circumvent the Federal reserve in whatever small way they can.”
The facility will not only provide a secure place for individuals, business, cities, counties, government agencies and even other countries to store gold and other precious metals, the law also creates a mechanism to facilitate the everyday use of gold and silver in transactions. Ultimately, private individuals and entities will be able to purchase goods and services, using assets in the vault the same way they use cash today. Exemption from taxation of precious metals stored in the vault will further facilitate the use of stored bullion as money. This would incentivize the use of the Texas Bullion Depository. If they then start allowing checks and debit cards to be used in conjunction with the bullion accounts – likely the next step – it would essentially create a specie- and bullion-based bank introducing currency competition with Federal Reserve notes.
Constitutional tender expert Professor William Greene said when people in multiple states actually start using gold and silver instead of Federal Reserve Notes, it could create a “reverse Gresham’s effect,” drive out bad money, effectively nullify the Federal Reserve, and end the federal government’s monopoly on money.