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A bill that recognizes U.S. gold and silver coins as legal tender and exempts their sale from the state capital gains tax passed the Utah House Government Operations Committee Wednesday.
Supporters say HB317, introduced by Rep. Brad Galvez, R-West Haven, is a first step to creating an "inflation-proof" alternative to the "paper dollar."
Larry Hilton, a local attorney and supporter of the "sound money movement," said that "un-backed money" created by the Federal Reserve to stimulate the economy, is "hanging over us like the sword of Damocles waiting to just come down in an avalanche and destroy the value of our currency."
While the bill says the use of gold and silver coin as currency would be voluntary, it requires the Legislature to study the "possibility of establishing an alternative form of legal tender," and to come up with further recommendations for the 2012 session.
Jeffrey Bell, the policy director for the Washington, D.C.-based American Principles Project, told legislators the bill would be seen as a "symbolic act."
But it sends a signal, he said, to Washington "political elites who want to leave the value and staying power of our currency uncertain, indefinite, so that they can at will intervene to do what they think would ameliorate the situation" facing the U.S. economy.
"The last time we had the system that we are recommending the international gold standard it set a record for least inflation," Bell added.
The bill passed 7-1 and will go on to the full House for debate. The lone dissenter, Rep. Rebecca Chavez-Houck, D-Salt Lake City, said her only reservation was the bill's potential effect on tax revenues.
"I hesitate to implement some of the tax code changes in advance of a study," she said.
The bill's fiscal note predicts a loss in tax revenue of over $260,000 in 2012 and over $600,000 in 2013. But Galvez said that is based on an assumption that the sale of such coins currently accounts for 0.5 percent of capital gains tax revenue.