LB 1317 is the fourth major sound money bill to become law this year, as state lawmakers across the nation scramble to protect the public from the ravages of inflation and runaway federal debt.

Under the new Nebraska law, any “gains” or “losses” on precious metal sales reported on federal income tax returns are backed out, thereby removing them from the calculation of a Nebraska taxpayer’s adjusted gross income (AGI).

Supported by the Sound Money Defense League, Money Metals Exchange, and in-state advocates, Nebraska’s sound money measure passed out of the unicameral legislature’s Revenue committee unanimously before being amended into a larger bill.

Sponsor Sen. Ben Hansen said upon news of the formal enactment of his legislation:

Gold and silver are the only forms of currency mentioned in our Constitution and with that comes the people’s ability to use it as such without penalty from the government. Saving, and using, gold and silver is our right and one of the only checks and balances to our federal government’s unending devaluation of our paper currency.

Taxpayers often realize ‘gains’ when converting the monetary metals back into Federal Reserve notes even though the ‘gains’ do not reflect an increase in real value but rather reflect the currency’s ongoing devaluation.

Despite the lack of “real” gains, the Internal Revenue Service imposes capital gains taxes on such transactions. Nebraska has now opted out at the state level, declining to carry the IRS’s position into the definition of Nebraska income.

Jp Cortez, executive director of the Sound Money Defense League, explained during his testimony before the Revenue Committee that the ferocious wave of inflation facing Nebraskans is largely caused by harmful actions of the Federal Reserve:

The state can take a different course and provide Nebraska citizens cleaner access to gold and silver ownership – and these metals are not only a proven inflation hedge but states all over the country are remonetizing constitutional sound money in the form of gold and silver.

Eleven other states already do not charge an income tax on sales of precious metals, with Arkansas, Arizona, and Utah recently enacting such laws. Meanwhile, Iowa, Georgia, Oklahoma, Missouri, West Virginia, and Kansas have been considering similar legislation in 2024.

“Investments in precious metals coins and bullion in Nebraska are now rightly exempt from both sales tax and income tax,” said Stefan Gleason, CEO of Money Metals and Chairman of the Sound Money Defense League.

Neutralizing Nebraska’s income tax treatment of the monetary metals removes significant disincentives in the Cornhusker State against the ownership and use of the monetary metals.

Meanwhile, LB 1317 revises the state’s formal definition of money by adding language that states: “Money does not include central bank digital currency.”

The new law defines central bank digital currency as “a digital medium of exchange, token, or monetary unit of account issued by the United States Federal Reserve System or any analogous federal agency that is made directly available to the consumer by such federal entities. Central bank digital currency (CBDC) includes a digital medium of exchange, token, or monetary unit of account so issued that is processed or validated directly by such federal entities.”

Sen. Hansen said: “I believe we have to be extra vigilant in our assessment and application of a Central bank digital currency to make sure they do not become a danger to our freedom. That’s why we defined in LB 1317 that CBDC’s are not classified as currency in Nebraska, which should help protect against unwarranted mandates for their use in the future.”

Versions of this “anti-CBDC language” have advanced or signed into law in Tennessee, North Carolina, and Florida, South Dakota, and Indiana . Congressman Alex Mooney has also introduced a federal measure to block the Federal Reserve’s digital currency scheme.

In his testimony, Cortez discussed the potential risks of adopting a CBDC, including creating a greater ability to track all financial transactions, disallowing certain types of purchases, or even completely “turning off” a targeted individual’s access to money.

Nebraska joins Utah, Wisconsin, and Kentucky as states to have enacted pro-sound money legislation into law so far in 2024. Currently ranked 22nd in the 2024 Sound Money Index, Nebraska’s ranking is expected to rise.

About Sound Money Defense League

The Sound Money Defense League is a non-partisan, national public policy group working to restore sound money at the state and federal level and publisher of the Sound Money Index.

As inflation continues to terrorize the budgets of Americans and states alike, two Tennessee bills empowering the State Treasurer to invest state funds in physical gold and silver are moving quickly through the legislature.

House Bill 1479, introduced by Rep. Bud Hulsey, passed out of the House of Representatives on Monday with a 98-0 vote.

Senate Bill 519, the identical senate-side companion bill introduced by Sen. Frank Niceley, passed out of the Senate State and Local Government Committee today by a unanimous vote of 8-0.

The legislation defines “bullion” and “specie,” as well as explicitly stating that “subject to appropriation, the state treasurer may purchase and sell gold or precious metal bullion or specie that will be directly owned by the state, and in the custody of the state treasurer.”

Additionally, the twin bills would allow the state treasurer to “make and enter into contracts, trust instruments, agreements, and other instruments with a person to effectuate this section, including, but not limited to, financial institutions, accountants, auditors, attorneys, consultants, and other contractors.”

Lastly, the measure calls for “physical gold and precious metal purchased under these acts to be custodied by the state treasurer in a state depository, and maintained in a vault within the state depository’s banking facilities in accordance with accepted industry standards for secure storage, and within the geographical boundaries of Tennessee.”

States that help set up the infrastructure to protect state funds with the monetary metals will help further to bring gold and silver into use as an alternative to the inflationary paper-money system, as well as buttressing state funds, many of which are invested in risky paper assets.

SB 519 has been placed on the senate floor calendar for a vote on final passage in the coming days.

Sen. Niceley and Rep. Hulsey are steadfast champions of sound money, earning each of them the 2022 Sound Money Legislator of the Year award last year for their tireless work on eliminating Tennessee’s state sales tax on gold and silver.

After ending the state sales tax on gold and silver, Tennessee shot up the 2023 Sound Money Index rankings to earn a 9th place finish. Tennessee also recently ended its state income tax on sale all capital assets, including gold and silver.

Several other states are considering their own sound money bills this month, including Alaska, Idaho, Maine, Missouri, Mississippi, South Carolina, Vermont, Iowa, Kentucky, Oregon, and more.

About the Author

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

Senate Bill 33, primarily sponsored by Sen. Duey Strobel (R – Saukville) and Sen. Rachael Cabral-Guevara (R – Appleton), and cosponsored by Rep. Shae Sortwell, enjoys wide support – and would align Wisconsin with the policies of 42 other U.S. states.

Senate Bill 33 would exempt “precious metals bullion,” defined as coins, bars, rounds, and sheets that contain at least 35% gold, silver, copper, platinum, or palladium.

In 2019, Rep. Shae Sortwell (R – Two Rivers) introduced a similar measure that didn’t not receive a hearing. But upon introduction this year, Senate Bill 33 already has seven Senate sponsors and 16 House sponsors.

Imposing taxes on the exchange of Federal Reserve notes for monetary metals (i.e. gold and silver) has become an unusual and outmoded practice in the United States… only 8 states still engage in it.

With 42 states now having eliminated sales taxes on purchases of gold and silver, the Badger State may be the next state to do so – although similar bills are moving forward in Mississippi, Kentucky, and Maine.

Passage of SB 33 would remove a major disincentive to holding gold and silver — a move that has become especially pertinent at a time when inflation is ripping through the economy and wreaking havoc on family budgets.

Article 1, Section 10 of the U.S. Constitution prescribes that gold and silver are money, and imposing a tax on the exchange of one money for another is inherently illogical.  But there are other strong public policy reasons why so few states still impose sales tax on precious metals purchases:

• Levying sales taxes on precious metals is inappropriate. Sales taxes are typically levied on final consumer goods. Computers, shirts, and shoes carry sales taxes because the consumer is “consuming” the good. Precious metals are inherently held for resale, not “consumption,” making the application of sales taxes on precious metals inappropriate.
• Studies have shown that taxing precious metals is an inefficient form of revenue collection. The results of one study involving Michigan show that any sales tax proceeds a state collects on precious metals are likely surpassed by the state revenue lost from conventions, businesses, and economic activity that are driven out of the state.

The harm is exacerbated when you consider that all of Wisconsin’s neighbors (Minnesota, Iowa, Illinois, and Michigan) have already stopped taxing gold and silver. This harms in-state businesses. Most recently, Tennessee ended this tax in 2022, and Arkansas and Ohio eliminated this tax in 2021.

• Taxing precious metals is unfair to certain savers and investors. Gold and silver are held as forms of savings and investment. Wisconsin does not tax the purchase of stocks, bonds, ETFs, currencies, and other financial instruments.

• Taxing precious metals is harmful to citizens attempting to protect their assets. Purchasers of precious metals aren’t fat-cat investors. Most who buy precious metals do so in small increments as a way of saving money. Precious metals investors are purchasing precious metals as a way to preserve their wealth against the damages of inflation. Inflation harms the poorest among us, including pensioners, Wisconsinites on fixed incomes, wage earners, savers, and more.

In 2023, other bills to restore sound, constitutional money have already been introduced in Alaska, West Virginia, South Carolina, Missouri, Minnesota, Tennessee, and more.

Currently Wisconsin is tied for 45^th out of 50 in the 2023 Sound Money Index. Passage of SB 33 would significantly improve Wisconsin’s standing.

About the Author

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. Article cross-posted from Activist Post.