Senate GOP seeks to end taxes on gold and silver coins

Sens. Jim DeMint (R-S.C.), Mike Lee (R-Utah) and Rand Paul (R-Ky.) this week introduced legislation that would exempt gold and silver coins declared by the federal or any state government as legal tender from taxation.

The Sound Money Promotion Act, S. 1287, is meant to build on what the sponsors see as a reaction to overspending by the federal government and the falling value of the dollar. The senators said that in May, Utah became the first state to recognize these coins as legal tender within the state, and said 12 other states, including South Carolina, are considering similar measures.

"Thanks to the government's reckless overspending, continued bailouts, and the Federal Reserve's easy money policy, this year the purchasing power of the dollar hit an all-time low in the several decades since we went off the gold standard," DeMint said.

"In order to rebuild strength and confidence in our economy, we need both the fiscal discipline to cut wasteful spending and the monetary discipline to restrain further destructive monetizing of our debt," he said. "This legislation would encourage wider adoption of sound money measures, and that's a step in the right direction."

In the same statement, Lee said the dollar has lost 98 percent of its value since 1913. Sen. Paul said it would show that "states are serious about an alternative to a weakening dollar."

The three said the rising price of gold, the weakening dollar, the negative credit rating that Standard & Poor's gave to the U.S. earlier this year, and significant Federal Reserve purchases of U.S. Treasuries are all signs of increasing economic risks to the United States.

Jeff Bell, Policy Director at American Principles in Action and head of its Gold Standard 2012 project, said the bill indicates that faith in the paper dollar is waning.

"By encouraging gold and silver coins to be used as money by the states, they are allowing them to send Washington a strong message of no confidence in the paper dollar system," said Bell, who was an issues adviser in Ronald Reagan’s 1976 and 1980 presidential campaigns.