Wednesday, March 30, 2011

Utah Gold Standard Bill Becomes Law, But May Be Less Than It Seems

Utah's governor has signed the gold-standard bill into law. But, according to a CNN Money report, he did so largely because it enacted tax relief and took a politically popular swipe at the Federal Reserve. U.S.-minted gold and silver coins are legal tender, but only at face value - not market value. Presumably, one of the tasks that the study committee the law authorizes will be how to adjust legal-tender tax rates to the market price of the metals. As for the capital-gains elimination, it does not nullify federal taxes. Those still apply, at collectible rates.
According to a person close to Herbert, the governor signed the bill because it eliminates capital gains taxes on a popular investment. The other stuff, not so much.

"If somebody is stupid enough that they want to buy a Snickers bar at 7-Eleven with a gold coin worth thousands of dollars, they will be able to do that," the source said.
The same source threw cold water on the idea that the study committee will go all the way in setting up gold and silver as full-fledged alternative currencies, claiming that there would be major constitutional issues that would get in the way.

Desite its limitations, it's still an important symbol and milestone. It certainly shows how much political gain can be mined by bearding Ben Bernanke. Given the passion behind the bill in the House, I think a sneak was pulled to get the Governor to sign. That source may scoff, but it's still law. How broad the study committee's mandate will be, is going to be the next political battle for the gold standard. Once the idea spreads, those limitations should largely dissolve.

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