Customers could soon be able to walk into a store and use gold or silver to pay for a purchase in at least one US state if a bill in the state legislature becomes law.
The law wouldn’t abolish the US dollar in Arizona but instead would allow people to use gold or silver in transactions instead of the dollar. Citizens of Arizona’s neighboring state of Utah already have that right.
Among other things, the act would allow citizens to pay their taxes in gold or silver bullion. It would not require any business to accept gold and silver.
“The bill specifically states that nobody has to accept gold and silver coins as payments, unless it’s specifically outlined in some sort of contract, so you’re not going to be exchanging gold coins for McNuggets any time soon,” Phoenix News Times columnist Matthew Hendley wrote.
The bill passed the Arizona Senate with a vote of 18-12 on Feb. 24 but may face an uphill battle, because Gov. Jan Brewer vetoed a similar bill last May. Advocates of the Constitutional Tender Act hope that public education will change the governor’s mind.
A Constitutional Argument
Supporters of the bill believe that the 10th Amendment to the US Constitution gives citizens the right to use gold and silver as legal tender. SB 1096 would require government agencies to take gold or silver coins or bullion for tax payments. It would also give businesses the right to take gold and silver in payment if they chose.
Others say the measure is needed because the dollar could lose value due to hyperinflation in the near future. That’s the belief of the 10th Amendment Center, which is promoting the Constitutional Tender Act.
“Over time, as residents of the State use both Federal Reserve Notes and silver and gold coins, the fact that the coins hold their value more than Federal Reserve Notes do will lead to a ‘reverse Gresham’s Law’ effect, where good money (gold and silver coins) will drive out bad money (Federal Reserve Notes),” William Greene wrote in support of the act at the 10th Amendment Center’s website.
Governor Has Concerns
Brewer explained her opposition to the idea last year.
“While I believe the concern over a devalued dollar as a result of an unsustainable federal deficit is justified, I am unable to support this legislation,” Brewer wrote about a similar called Senate Bill 1439 last year. “I believe the provisions in this legislation need to be more carefully examined and there should be prior coordination with those government agencies tasked with oversight of these transactions.”
Brewer also was worried that the law would give businesses an unfair tax advantage, the Arizona Republic reported. She was also concerned about income tax advantages businesses would have enjoyed.