Another year, another bill to legitimize gold and silver as legal tender in Arizona.
For the past half a decade, Arizona State legislators have proposed bills stemming from concerns that the paper money printed by the Federal Reserve Bank is losing value. All of these bills do fairly well in both the House and Senate, but consistently get beaten down late in the process – usually with vetoes from the governor.
This year, the bill is a little different than it has been. It focuses more on the taxation of the gold and silver and less on the actual usage of gold and silver at your neighborhood market.
“This is merely removing a wrongly attached capital gain tax,” Doug Ardt, a vocal member of Arizona constitutional advocates who manages the website Arizona Sound Money Act, said. “The state isn’t ready for it. Because speaking the language of liberty is a foreign language for most citizens.”
House Bill 2014, introduced by Rep. Mark Finchem, R-Casa Grande, allows a tax deduction for the capital gains received from the exchange of one kind of legal tender, like paper money, for another, like gold coins. Today, if you own a $5 gold coin, it is worth exactly that – five dollars. And if you try to sell your gold coin (today, a gram of gold is about $39.75) your profit would be taxed. HB2014 removes that tax, which proponents say is the first step to legitimizing gold and silver as legal tender.
Finchem’s bill works to redefines legal tender as a “medium of exchange that is authorized by the U.S. Constitution or Congress for the payment of debts, public charges, taxes and dues.”
It might seem like this doesn’t change much, but Ardt says it’s the first step in going back to the gold standard.
Jack Lunsford, president and CEO of the Arizona Small Business Association, thinks this bill, and going back to the gold standard, is a solution in search for a problem.
“I don’t see a huge cry for this,” Lunsford said. His association works with small and large businesses across the state. “It appears to be satisfying a particular constituency, that’s probably a minority.
“This could create problems for large and small businesses,” Lunsford said. He said customers and owners won’t want to be forced to do everything under a new definition of legal tender, particularly if it’s different from the states around them.
Finchem is no stranger to the legal tender discussion. He campaigned on the “loss of purchasing power,” and since he’s been in office, has routinely attempted to redefine legal tender.
Ardt said he believes that precious metals in coin form hold long-term wealth much more accurately than the U.S.’s current “depreciating currency.” He encourages his readers to invest in these precious metals, no matter the current law.
Also, he is vehemently against the governor’s decision to veto these bills.
“Apparently the AZ Republican legislators are enlightened enough to apply real solutions to Arizona’s economic problems with which the governor just plays politics,” Ardt said.
Supporters of these bills argue it won’t affect the way shops are run at all. Your 40-hour work week, Ardt explained, is being put into your bank account in the form of paper dollars. The ideal bill would have you deposit a 40-hour work week in the form of gold or silver into your account.
Back in 2013, there was Senate Bill 1439, sponsored by Sen. Chester Crandell, R-Coconino, that was a more extreme version of the current bill. It would have allowed Arizona shopper to plunk down gold or silver to pay for clothes or parking tickets.
Then in 2014, Crandell tried again with Senate Bill 1096. Similar to Crandell’s bill the year before, it recognizes silver or gold coins as legal tender and authorizes licensed escrow agents to accept deposits of these coins to pay debts.
In 2015, Rep. Finchem took up Crandell’s charge with House Bill 2173, that would, again, recognize silver and gold coins as permissible legal tender. It was vetoed.
Last year, Ducey vetoed another like bill – Senate Bill 1141, introduced by Sen. John Kavanagh, R-Fountain Hills.
The fight for legal tender laws likely won’t stop any time soon. A citizen has already written in for a 2018 ballot measure outlining a legal tender ballot initiative.
No matter what these legislators do, the bills do remarkably well in the House and Senate, before getting shut down late in the process. Why? The U.S. Constitution specifically prohibits states from creating their own currency.
Christianna Silva is the Don Bolles Fellow covering the Legislature for Arizona Sonora News, a service provided by the school of journalism at the University of Arizona. Reach her at christiannaj@email.arizona.edu.