Congressman Ron Paul [R-TX] on Wednesday introduced legislation that would, if signed into law, end taxes on coins and bullion and repeal legal tender laws. The bill’s lofty goal is to reintroduce a system of competing currencies.
"At this country’s founding, there was no government controlled national currency. While the Constitution established the Congressional power of minting coins, it was not until 1792 that the US Mint was formally established," Rep. Ron Paul said.
"In the meantime, Americans made do with foreign silver and gold coins. Even after the Mint’s operations got underway, foreign coins continued to circulate within the United States, and did so for several decades.
H.R. 4248, or the Free Competition in Currency Act of 2009, includes several measures to end government controlled currency. One is to repeal Section 5103 of Title 31 of the United States Code which includes legal tender language that, according to Ron Paul, should not exist.
"There is nothing in the Constitution that grants the Congress the power to enact legal tender laws. We, the Congress, have the power to coin money, regulate the value thereof, and of foreign coin, but not to declare a legal tender. Yet, there is a section of US Code, 31 USC 5103, that purports to establish US coins and currency, including Federal Reserve notes, as legal tender."
Federal law currently mandates short-term capital gains rates of up to 35 percent for coins and long-term capital gains taxes of 28 percent, which Ron Paul argues is a hindrance to competitive currencies. H.R. 4248 would eliminate taxes on "any coin, medal, token, or gold, silver, platinum, palladium, or rhodium bullion" as well as restrict states from assessing taxes and fees "on any currency."
Finally, the legislation would eliminate laws that prohibit the operation of private mints, and retroactively end prosecutions and convictions of citizens who have been charged with such. Ron Paul specifically discussed this aspect of the bill as well as the raids on Liberty Dollar when he introduced the legislation. (See Liberty, Ron Paul Dollars Seized in Raid.)
"Evidently the government felt threatened, as Liberty Dollars had all their precious metal coins seized by the FBI and Secret Service in November of 2007. Of course, not all of these coins were owned by Liberty Services, as many were held in trust as backing for silver and gold certificates which Liberty Services issued. None of this matters, of course, to the government, which hates competition. The responsibility to protect contracts is of no interest to the government."
The bill has been referred to the Committee on Financial Services, and in addition to the Committees on Ways and Means, and the Judiciary.
For any legislation to become law, it must pass in the House, Senate and get signed by the President.