By Jp Cortez
With inflation raging across America, an Iowa lawmaker seeks to end one of the strongest disincentives to owning and using gold and silver: capital gains taxes.
A tax-neutral bill introduced by Rep. Jeff Shipley (R – Van Buren), House File 208 would prompt Iowa taxpayers to remove from their reported state income all gains (or losses) tied to sales of gold and silver.
Iowa rightfully exempted the monetary metals from state sales taxes years ago. Removing income tax from the precious metals is the logical next step. By passing this bill, Iowa would join several other states in ending income taxation of the only form of money mentioned in U.S. Constitution.
According to Rep. Shipley, “Inflation is destroying the wealth and earnings of Iowa families, and people are looking for places to save their wealth without being hammered by taxes. Gold and silver are the only money mentioned in the U.S. Constitution and Iowa shouldn’t be taxing these metals.”
Wyoming, Arizona, Utah have already passed bills similar to HF 208. South Carolina, West Virginia, Missouri, and Idaho are considering such measures right now.
Several decades ago, monetary gold and silver — and dollars formally redeemable in gold and silver — were supplanted by the Federal Reserve note as America’s currency. However, an increasing number of Iowa citizens are realizing that holding gold and/or silver as a form of savings can help protect against the ongoing devaluation of the Federal Reserve note.
Here are a few reasons why House File 208 is good public policy:
- Current Iowa law assesses taxes on imaginary gains. Under current law, a taxpayer who sells precious metals may end up with a capital “gain” in terms of Federal Reserve Notes. This capital “gain” is not necessarily a real gain, it’s often a nominal gain that results from the inflation created by the Federal Reserve and the attendant decline in the dollar’s purchasing power.
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Yet this nominal gain is taxed at the federal level – and, because Iowa uses federal adjusted gross income (AGI) as a starting point for Iowa income calculations, this nominal gain is taxed again by the Hawkeye State.
- Inflation harms the poorest among us. Inflation is a regressive tax. The hardest hit are wage earners, savers, and pensioners on fixed incomes – as well as those who own few or no tangible assets.
- Taxing imaginary gains is harmful to citizens attempting to protect their assets. Investments in precious metals coins and bullion are rightly exempt from Iowa’s sales tax. Neutralizing Iowa’s income tax treatment of the monetary metals would remove the last major disincentive in Iowa that stands against the ownership and use of the monetary metals.
Policies that penalize savers in precious metals reduce the likelihood that Iowa citizens will take prudent steps to insulate themselves from the inflation and financial turmoil caused by Congress and the Federal Reserve.
Iowa is currently ranked 18th on the Sound Money Index. If HF 208 becomes law, the Hawkeye State would be competing for a top spot against states like Wyoming, South Dakota, and Alaska, the three states currently atop the index.
Last week, the Wyoming Senate and the Missouri Senate both became the first states in 2023 to pass sound money legislation out of a full legislative chamber.
More than a dozen states have introduced pro-sound money legislation in 2023 so far, including Alaska, Minnesota, Mississippi, Oklahoma, Tennessee, Oregon, West Virginia, Wisconsin, Kentucky, Florida, and more.
Source: Money Metals
Jp Cortez is a graduate of Auburn University and a resident of Charlotte, North Carolina. He is the Policy Director of the Sound Money Defense League, an organization working to bring back gold and silver as America’s constitutional money. Follow him on Twitter @JpCortez27
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