South Carolina Legal Tender Act Would Treat Gold & Silver As Money

[Swordsmyth]

A bill prefiled in the South Carolina House would make gold and silver coins legal tender in the state. Passage of this bill would take a step toward creating currency competition in South Carolina and undermine the Federal Reserve’s monopoly on money.
Rep. Stewart Jones filed House Bill 4678 (H.4678) on Nov. 20. Under the proposed law, “gold and silver coins minted foreign or domestic shall be legal tender in the State of South Carolina under the laws of this State. No person or other entity may compel another person or other entity to tender or accept gold or silver coin unless agreed upon by the parties.”

​

Practically speaking, this would allow South Carolina residents to use gold or silver coins to pay taxes and other debts owed to the state. In effect, it would put gold and silver on the same footing as Federal Reserve notes.
The phrase, “unless agreed upon by the parties” has important legal ramifications. This wording reaffirms the court’s ability, and constitutional responsibility according to Article I, Section 10, to require specific performance when enforcing such contracts. If voluntary parties agree to be paid, or to pay, in gold and silver coin, South Carolina courts could not substitute any other thing, e.g. Federal Reserve Notes, as payment.
South Carolina could become the fourth state to recognize gold and silver as legal tender. Utah led the way, reestablishing constitutional money in 2011. Wyoming and Oklahoma have since joined.
The effect has been most dramatic in Utah where United Precious Metals Association (UMPA) was established after the passage of the Utah Specie Legal Tender Act and the elimination of all taxes on gold and silver. UPMA offers accounts denominated in U.S. minted gold and silver dollars. The company also recently released the “Utah Goldback.” UPMA describes it as “the first local, voluntary currency to be made of a spendable, beautiful, physical gold.”
South Carolina has already repealed the sales tax on gold and silver. That removed one barrier to using gold and silver in everyday transactions. Capital gains taxes are still imposed on gold and silver for state income tax purposes. After establishing gold and silver as legal tender, South Carolina should repeal the capital gains tax to completely open the door to using it as money.

More at: https://www.zerohedge.com/economics/south-carolina-legal-tender-act-would-treat-gold-silver-money

 

[Zippyjuan]

If it is like all the other "gold and silver as money" acts, all it does is remove sales tax on buying and selling coins. "Legal tender" means accepting them at face value- not their gold/ silver content.

"Article 17

Gold and Silver as Legal Tender

Section 1-1-1110. To the full extent allowed by Article 1, Section 10, Clause 1 of the Constitution of the United States, gold and silver coins minted foreign or domestic shall be legal tender in the State of South Carolina under the laws of this State.

Section 1-1-1120. No person or other entity may compel another person or other entity to tender or accept gold or silver coin unless agreed upon by the parties."

SECTION 2. This act takes effect upon approval by the Governor.

https://www.scstatehouse.gov/sess123_2019-2020/bills/4678.htm

That means you can legally use one of these (assuming the bill is passed) to pay for a $50 purchase (but who would use a one ounce gold coin for a $50 purchase?) :

Capital gains taxes are still imposed on gold and silver for state income tax purposes.

Of course, if you are using a $50 gold one ounce coin to make a purchase of $50, you probably aren't making any capital gains on the deal.

But then I found this: https://www.forbes.com/sites/realsp...gold-and-silver-coins-circulate/#2999ec01477a

Suppose a restaurant wants to be paid in silver and you agree to buy a steak dinner with an Eagle. The IRS treats this trade as a sale of the silver at the current market price. You must pay tax based on the gain in the silver price from when you bought it.

If the tax expense doesn’t stop the circulation of silver, then the onerous reporting and filing requirements will. You have to keep records of the date and price of each coin you buy. Each time you use one in trade, you must record the date and current market price. Your tax return must include a ledger of all of your silver transactions.

So even if you used your $50 gold coin to buy something worth $50, Uncle Sam will want you to figure out the difference between what the price of gold was when you bought it and the price of gold when you spent it and pay capital gains on the difference- even though you lost by using it for just $50.

 

[Swordsmyth]

If it is like all the other "gold and silver as money" acts, all it does is remove sales tax on buying and selling coins. "Legal tender" means accepting them at face value- not their gold/ silver content.



That means you can legally use one of these (assuming the bill is passed) to pay for a $50 purchase (but who would use a one ounce gold coin for a $50 purchase?) :

Whether or not you are right it is a step in the right direction.

 

[Grandmastersexsay]

Whether or not you are right it is a step in the right direction.

He is right in the sense that no one would use a $50 one oz gold coin to buy something worth $50. Reading this part:

gold and silver coins minted foreign or domestic shall be legal tender in the State of South Carolina under the laws of this State. No person or other entity may compel another person or other entity to tender or accept gold or silver coin unless agreed upon by the parties.

It is obvious that this is not referring to gold and silver coins minted by the US mint, but coins minted by companies and individuals. People will be using coins minted with their weight on them. Furthermore, assuming the dollar value printed on US minted coins will be the defined value is an asinine jump to conclusions.

I don't know why you feed this troll with your time. Everyone just needs to ignore him. Don't ever address him and he will go away.

 

[Swordsmyth]

I don't know why you feed this troll with your time. Everyone just needs to ignore him. Don't ever address him and he will go away.

I try to void replying to troll posts unless they might sway some people.
But even those I never respond to never go away.

 

[Stratovarious]

I try to void replying to troll posts unless they might sway some people.
But even those I never respond to never go away.

I agree with Grandmaster, and have mentioned this too you many times.
I would bet that the bulk of your responses on this forum to any single poster are
responses to Zippy.
You just mentioned that there is someone here that you don't respond to , yet they never go away, I don't know who that
someone is but I'd not mind joining you in avoiding them, and I'll bet grandmaster and others
would join in as well.

No one goes away unless we unite, and boycott, their posts then become meaningless, you and some other members
including myself provide a platform for zippy by our prolific responses.

I get your reasons for responding to zippy but disagree, I realize you will continue that path, just throwing
this out there again.

 

[Swordsmyth]

I agree with Grandmaster, and have mentioned this too you many times.
I would bet that the bulk of your responses on this forum to any single poster are
responses to Zippy.
You just mentioned that there is someone here that you don't respond to , yet they never go away, I don't know who that
someone is but I'd not mind joining you in avoiding them, and I'll bet grandmaster and others
would join in as well.

No one goes away unless we unite, and boycott, their posts then become meaningless, you and some other members
including myself provide a platform for zippy by our prolific responses.

I get your reasons for responding to zippy but disagree, I realize you will continue that path, just throwing
this out there again.

I'm moving in your direction.

 

[Stratovarious]

I'm moving in your direction.

Let us know ,I , and I think others that matter will join you.........

 

[Grandmastersexsay]

I'm moving in your direction.

He's not swaying anyone on here. All he is doing is derailing conversations because people respond to him.

 

[r3volution 3.0]

Practically speaking, this would allow South Carolina residents to use gold or silver coins to pay taxes and other debts owed to the state.

What does that mean?

They can pay their taxes in gold or silver at their market values?

They can already do that, by selling them for dollars and paying the taxes/other debts in dollars.

The phrase, “unless agreed upon by the parties” has important legal ramifications. This wording reaffirms the court’s ability, and constitutional responsibility according to Article I, Section 10, to require specific performance when enforcing such contracts. If voluntary parties agree to be paid, or to pay, in gold and silver coin, South Carolina courts could not substitute any other thing, e.g. Federal Reserve Notes, as payment.

It's not clear that that's what the quoted text means: "No person or other entity may compel another person or other entity to tender or accept gold or silver coin unless agreed upon by the parties." That sounds less like a requirement for specific performance on gold/silver delivery contracts than a reassurance that payment in or acceptance of gold/silver won't be required for other contracts.

It would be helpful to have the actual text of the bill, which doesn't seem to be available at the link provided.

South Carolina could become the fourth state to recognize gold and silver as legal tender. Utah led the way, reestablishing constitutional money in 2011. Wyoming and Oklahoma have since joined.
The effect has been most dramatic in Utah where United Precious Metals Association (UMPA) was established after the passage of the Utah Specie Legal Tender Act and the elimination of all taxes on gold and silver. UPMA offers accounts denominated in U.S. minted gold and silver dollars. The company also recently released the “Utah Goldback.” UPMA describes it as “the first local, voluntary currency to be made of a spendable, beautiful, physical gold.”
South Carolina has already repealed the sales tax on gold and silver. That removed one barrier to using gold and silver in everyday transactions. Capital gains taxes are still imposed on gold and silver for state income tax purposes. After establishing gold and silver as legal tender, South Carolina should repeal the capital gains tax to completely open the door to using it as money.

More at: https://www.zerohedge.com/economics/south-carolina-legal-tender-act-would-treat-gold-silver-money

While I appreciate the spirit of it, at the end of the day this isn't going to do anything. Eliminating (some) taxes on gold/silver transactions, and (maybe) allowing for specific performance of gold/silver contracts, at the state level, in some states, isn't nearly enough to challenge the dominance of the dollar - not to mention that the bill hasn't even passed yet.

 

[Zippyjuan]

What does that mean?

They can pay their taxes in gold or silver at their market values?

They can already do that, by selling them for dollars and paying the taxes/other debts in dollars.



It's not clear that that's what the quoted text means: "No person or other entity may compel another person or other entity to tender or accept gold or silver coin unless agreed upon by the parties." That sounds less like a requirement for specific performance on gold/silver delivery contracts than a reassurance that payment in or acceptance of gold/silver won't be required for other contracts.

It would be helpful to have the actual text of the bill, which doesn't seem to be available at the link provided.



While I appreciate the spirit of it, at the end of the day this isn't going to do anything. Eliminating (some) taxes on gold/silver transactions, and (maybe) allowing for specific performance of gold/silver contracts, at the state level, in some states, isn't nearly enough to challenge the dominance of the dollar - not to mention that the bill hasn't even passed yet.

I posted the text of the bill earlier- it is very short.

https://www.scstatehouse.gov/sess123_2019-2020/bills/4678.htm

(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)
A BILL
TO AMEND THE CODE OF LAWS OF SOUTH CAROLINA, 1976, BY ADDING ARTICLE 17 TO CHAPTER 1, TITLE 1 SO AS TO PROVIDE THAT GOLD AND SILVER COINS MINTED FOREIGN OR DOMESTIC SHALL BE LEGAL TENDER IN THIS STATE, AND TO PROVIDE THAT NO PERSON MAY COMPEL ANOTHER PERSON TO TENDER OR ACCEPT GOLD OR SILVER COIN UNLESS AGREED UPON BY THE PARTIES.

Be it enacted by the General Assembly of the State of South Carolina:

SECTION 1. Chapter 1, Title 1 of the 1976 Code is amended by adding:

"Article 17

Gold and Silver as Legal Tender

Section 1-1-1110. To the full extent allowed by Article 1, Section 10, Clause 1 of the Constitution of the United States, gold and silver coins minted foreign or domestic shall be legal tender in the State of South Carolina under the laws of this State.

Section 1-1-1120. No person or other entity may compel another person or other entity to tender or accept gold or silver coin unless agreed upon by the parties."

SECTION 2. This act takes effect upon approval by the Governor.

Legal tender means accepting them at face value- not their metalic content. It would rule out things like bullion which do not have a face value printed on them.

 

[Zippyjuan]

I agree with Grandmaster, and have mentioned this too you many times.
I would bet that the bulk of your responses on this forum to any single poster are
responses to Zippy.
You just mentioned that there is someone here that you don't respond to , yet they never go away, I don't know who that
someone is but I'd not mind joining you in avoiding them, and I'll bet grandmaster and others
would join in as well.

No one goes away unless we unite, and boycott, their posts then become meaningless, you and some other members
including myself provide a platform for zippy by our prolific responses.

I get your reasons for responding to zippy but disagree, I realize you will continue that path, just throwing
this out there again.

https://www.goldbroker.com/investing-guide/legal-tender-coin-definition

HOW TO RECOGNIZE LEGAL TENDER COINS

There are two types of legal tender coins, those classed as “bullion” coins, and those classed as “commemorative coins”. The former are much more common and include everything from the Maple Leaf (produced by the Royal Canadian Mint) to the Silver Eagle (produced by the US Mint).

In both cases these coins will display the following characteristics:

Face Value: This is the amount that the coin is worth and the amount that it can be exchanged for, at least in theory. This amount does not take into consideration the precious metal content, which means the intrinsic value of the coin is usually much higher.

The Mint: Legal tender coins can only be produced by official mints — the ones who usually produce coins and notes for circulation. Their mark will typically be displayed on the coin, often as an initial.

The Year: All legal tender coins display the year that they were minted. This information is usually found on the reverse or obverse of the coin.

If you want to trade for the metal content instead of its face value, that is barter and not a "legal tender" exchange.

 

[Stratovarious]

https://www.goldbroker.com/investing-guide/legal-tender-coin-definition



If you want to trade for the metal content instead of its face value, that is barter and not a "legal tender" exchange.

The one thing better than legal tender , is barter.

 

[Zippyjuan]

The one thing better than legal tender , is barter.

But extremely inconvenient. Imagine trying to barter for everything you need. That is why we use money. If you want something I want to trade but you don't have anything I want to trade for, you need to find a third or fourth, or fifth person, or even more to get in on the transaction so everybody gets something they want.

 

[jkr]

so...STILL SCREWED?


asking 4 friend

 

[Grandmastersexsay]

What does that mean?

They can pay their taxes in gold or silver at their market values?

They can already do that, by selling them for dollars and paying the taxes/other debts in dollars

The problem with that is the person liquidating their gold or silver has to pay capital gains tax on any interest earned since they bought that precious metal.

I like the sound of this bill, or the idea behind it. Having a currency that can be used to pay state taxes, and hopefully with time, goods and services, that has historically tracked very well with inflation, could actually turn into a threat for the fed if enough states adopt similar measures. This would even drive the price of gold up, making it a currency with actual deflation. I don't see it ever being used to purchase a cup of coffee, but it could certainly become popular for large purchases.

 

[r3volution 3.0]

I posted the text of the bill earlier- it is very short.

https://www.scstatehouse.gov/sess123_2019-2020/bills/4678.htm

Legal tender means accepting them at face value- not their metalic content. It would rule out things like bullion which do not have a face value printed on them.

Wait, Zipster, that's the entire text of the bill...?

I might be suspicious about the motives of a person who introduces a bill, with little chance of passage, which does nothing..

The problem with that is the person liquidating their gold or silver has to pay capital gains tax on any interest earned since they bought that precious metal.

Right, but this bill doesn't change that.

I like the sound of this bill, or the idea behind it. Having a currency that can be used to pay state taxes, and hopefully with time, goods and services, that has historically tracked very well with inflation, could actually turn into a threat for the fed if enough states adopt similar measures. This would even drive the price of gold up, making it a currency with actual deflation. I don't see it ever being used to purchase a cup of coffee, but it could certainly become popular for large purchases.

Well...

 

[r3volution 3.0]

so...STILL SCREWED?


asking 4 friend

STILL SCREWED, confirmed

You should probably buy buy buy the stock market.

It's not overbought, only at historic highs.

 

[r3volution 3.0]

The problem with that is the person liquidating their gold or silver has to pay capital gains tax on any interest earned since they bought that precious metal.

That's one part of the problem.

The dollar is now the object of very significant "network effects," as the modern economists with no insights explain (by introducing a new term).

The older term would be demand, in contrast to, you know, supply.

 

[devil21]

So even if you used your $50 gold coin to buy something worth $50, Uncle Sam will want you to figure out the difference between what the price of gold was when you bought it and the price of gold when you spent it and pay capital gains on the difference- even though you lost by using it for just $50.

Or you could just, you know, tell Uncle Sam to get bent and not file anything voluntarily that puts one on the hook for such things as "figuring out the difference".

NC got rid of sales tax on PMs also. Any way, it's a positive step back toward sound money. As always, economic changes are incremental and directional, not one fast turn of events.