Perhaps there is a conspiracy to turn the United States back to the gold standard or maybe state legislators are just too hung over from all the Christmas parties and eggnog to think straight. Whatever it is, there seems to be an epidemic of state lawmakers who want to bring back the gold standard.
Yesterday, Foolocracy did a story on Utah where a legislator wants to create a parallel financial system in the state and have gold vaults protected by Utah’s own army.
Now Bobby Franklin, a state Representative from Georgia, has introduced a bill requiring the taxpayers to pay their taxes in gold and silver coins. A Georgia resident would not need to carry bags of gold ingots to pay taxes. Checking accounts and electronic transfers would be linked to special gold and silver accounts.
Franklin wants tax payments to be made in gold and silver because it is a “sound, constitutionally based money.” Yet his bill does not require the state to make payments in gold and silver nor does it explain how the state should handle the billions of dollars in precious metals it will hold.
One of the reasons some support the gold standard is fear that paper money may lead to inflation and ultimately a worthless currency. If people lose faith in the dollar, they may turn to gold or silver and require it for financial transactions.
Individual states are likely to be the last places that will lose faith in the dollar. To require gold and silver payments to the state lacks a significant purpose outside of convincing people in private commerce that it is a legitimate way to conduct financial transactions.
While Franklin’s bill does not require gold and silver for the rest of the economy, it encourages people to use it as a means of commerce.
The real craziness is some of the gold and silver backed accounts that Franklin proposes.
“Pre-1965 silver coins, silver eagles, and gold eagles shall be the exclusive medium which the state shall use to make any payments whatsoever to any person or entity, whether private or governmental. Such coins shall be the exclusive medium which the state shall accept from any person or entity as payment of any obligation to the state including, without limitation, the payment of taxes; provided, however, that such coins and other forms of currency may be used in all other transactions within the state upon mutual consent of the parties of any such transaction.”
Using pre-1965 coins may sound like a good idea because of their widely recognized precious metal content, but most of these coins have a greater value from collectors than their face value in gold or silver.
Why on earth would someone want to pay a tax bill with a currency that is more valuable on the private market?
There might be some good arguments for a gold and silver standard, but for states like Utah and Georgia to embrace it individually is only going to burden their citizens further. It is bad enough to pay taxes. Under Franklin’s concept, taxpayers have to worry about how they pay their taxes.
(This article incorrectly states that the state of Georgia is not required to pay its debts with gold or silver coins. Franklin’s bill clearly states in the first paragraph and other places that the state is under the obligation to pay its bills with gold or silver backed accounts. My mistake, and I have no explanation how I could have made such an obvious error except by the pressure of a time deadline.)