Gigantic congressional bills, crammed with every goodie needed to buy a senator or congressman, filled with little rewards for special interest groups who help the right people, and often jammed with just plain foolishness, are the hallmark of how business has been conducted for many decades in our capitol. The massive healthcare bill passed by Democrats last winter is an excellent example of this messiness. Section 9006 of the Patient Protection and Affordable Care Act amends the Internal Revenue Code so that, beginning in January 2012, a Form 1099 will have to be filled for all purchases of gold which exceed $600. This, of course, has nothing to do with health care at all. It does have to do with collecting yet more money from Americans in income taxes: $17 Billion over the next ten years, the Joint Committee on Taxation reports.

People are increasingly turning to gold as a hedge against financial collapse. As long as people can have the real security which comes from owning something portable, convertible, and which is not subject to the whims of federal financial bureaucrats, free citizens can maintain a degree of independence from the heavy hand of government. The right to own gold is analogous to the right to own firearms. Both empower the individual citizen in a very direct and practical way.

The new tax measure could have a devastating impact upon the businesses that buy and sell gold. Pet Heller, the owner of Liberty Coin Service in Michigan, has an estimated 1,000 customers every week. These are often people looking for some security in very uncertain economic times. Because the price of gold is so high, about $1,200 an ounce, a very high percentage of sales transactions at Liberty Coin Service will involve more than $600 worth of gold. Heller figures that he will be filing between 10,000 and 20,000 tax forms each year. That, in turn, will require Liberty Coin Service to hire a couple of clerical employees just to handle this mountain of new paperwork. The impact of that, of course, will be to reduce Heller’s profit margin and to raise the price he has to charge customers for the gold he sells. 

Perhaps the worst consequence of this new tax law is that huge corporations and very wealthy Americans will find this only a minor inconvenience. If a billionaire wants to buy gold, he is probably going to buy a very large amount of gold at one time. Americans in the middle class, seeking refuge from the economic problems of our nation, are more likely to save up to buy a much smaller amount, $1,000 perhaps, and then when he can afford it, buy some more gold. 

Another very troubling aspect to this new tax change is that it seems directed at those who urge Americans to protect themselves by investing in gold. Glenn Beck, for example, and other outspoken critics of our slide towards socialism, are spokesmen for companies that sell gold. Congressmen Weiner of New York has openly condemned these libertarians and the gold industry as forming an “unholy alliance.” Punishing political critics with the IRS Code is, tragically but clearly, part of the whole system of power in Washington.
 
The last flaw in this new law is that many Americans, knowingly or often unknowingly, will not file the IRS 1099 form. Oppressive and complex laws almost always lead some citizens to move into the underground economy and others to unwittingly violate the law. Although coin dealers will surely understand the new law, it is dubious whether a citizen who has saved up thousands of dollars of gold and then needs to convert that into cash will know that he will need to file a tax form for every gold sale of over $600.

It is hard to understand just what real good this measure in a federal bill intended to improve health care will actually achieve. It is certain, however, to weaken our freedom, complicate our lives, and push some Americans into innocent violation of federal law. 

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Bob L. said:

Don't let go Those Americans who owned gold in 1933 made a big mistake in surrendering it to the FED. If you now own gold or plan to buy some, you need to stash it in a safe place (not in a safe deposit box) and be prepared to tell "big brother" to take a hike or where to go if they try to confiscate it again. They can't try to tax it unless you sell it and I see the very real possibility of gold and silver becoming THE medium of exchange if the phony money FED notes become as worthless as 1921 German Marks.

July 23, 2010

Hal (GT) said:

Reason for the tax? One's things for sure. It's a great way to know who has the gold out there on Main Street.

July 23, 2010 | url

Ty said:

Is gold about to explode?? When I first heard about this new tax I was disgusted. Especially since it was part of the "Health Care" bill. I felt it was the governments mismanagement of the Dollar that had caused gold's rise in the first place. Now they want to get paid for that?! That's pathetic. Something else came to my mind; what does the 'gubmint' know that we don't? Is gold getting ready to pull a 1979 moon shot? Are the Russian about to announce gold-backing for the Ruple? Something is a'foot I believe. Why did the spies recently caught in America have an interest in the gold market? We never did get an explanation on that one. Either way, people will ignore the law and gold will thrive.

July 23, 2010