Forbes argues for removing all tax on gold

[FarmerD]

Steve Forbes thinks we should remove all taxes on gold and allow it to be used as money alongside dollars. 

http://www.forbes.com/sites/steveforbes ... -disaster/

Good idea or bad?

BTW For some reason he thinks Romney is shoe in.  Not sure why he is that confident. 

[smurff]

I like the idea of removing taxes on gold.

[craigr]

Excellent idea. Let the market decide which they prefer. Also allow gold clauses to be legally binding in contracts once again.

[WildAboutHarry]

Also allow gold clauses to be legally binding in contracts once again.

These clauses were common at the beginning of the 20th century.[citation needed] However, their use in the United States was invalidated by the Gold Reserve Act of 1934. Congress later reinstated their use for obligations (new contracts) issued after October 1977 in accordance with 31 U.S.C. § 5118(d)(2).[1]

On August 27, 2008, the United States Court of Appeals for the Sixth Circuit affirmed the enforceability of such clauses in the decision Jamaica Avenue, LLC vs S&R Playhouse Realty Co..[2]

Is this valid Wiki info?

[craigr]

Could be. I probably am not up to date on all the recent case law. I thought it was still not to the degree it was prior to 1934. But I could be wrong!

[WildAboutHarry]

I am not sure either.  I recalled reading somewhere about gold clauses being legal, but I cannot remember the source.

[D1984]

Steve Forbes thinks we should remove all taxes on gold

If we remove all taxes on the sale of gold (and/or silver) instead of merely removing them when gold is directly used for a purchase, then wouldn't that mean someone could achieve a real (after-inflation) gain and not pay capital gains taxes on it? By way of example, say an investor bought gold with US dollars at the bgeinning of January 2009 and sold it (for US dollars) today. He/she would have a capital gain in nominal terms of around 102%. Even if you account for inflation there is still a real gain (prices have not gone up 102% over the last three and a half years). This gain would be tax-free whereas a gain on, say, stocks would not be. This would distort the market by unfairly penalizing several classes of investments (stocks, bonds, real estate, commodities......anything on which capital gains taxes have to be paid, really) vis-a-vis another (precious metals) with hugely unequal tax treatment and in doing so would add yet another distortion to our already bloated and distortionary tax code.

Thta's not even getting into what would happen if gains in gold were made tax-free but losses were still tax-deductible.....can you say "perfect tax shelter?" People and corporations would engage in all sorts of transactions involving losses/gains in gold and simultaneous losses/gains in other assets with little or no economic purpose but to reduce taxes. Granted, the transactions would probably be structured in a complicated manner so as to appear to actually have some form of economic substance but they would really be just a huge tax shelter. If you want to reduce tax rates, fine, then pass a law doing so directlyy......creating another opportunity for complicated tax sheltering by those sophisticated enough to utilize it means that all the rest of us will have to pick up the slack tax-wise.

[smurff]

Everyday USA paper money will sometimes appreciate in value (during deflation). As has been more likely the case in recent years, it can also depreciate in value (because of inflation). These are meaningful changes in value that affect how much we pay for everything, from gasoline to corn flakes.

Despite those demonstrated changes in value, we are not allowed deductions for this depreciation on our taxes, nor do we have to pay capital gains taxes based on its appreciation.

The same rules should apply to gold.

[murphy_p_t]

Everyday USA paper money will sometimes appreciate in value (during deflation). As has been more likely the case in recent years, it can also depreciate in value (because of inflation). These are meaningful changes in value that affect how much we pay for everything, from gasoline to corn flakes.

Despite those demonstrated changes in value, we are not allowed deductions for this depreciation on our taxes, nor do we have to pay capital gains taxes based on its appreciation.

The same rules should apply to gold.

excellent response to a legitimate question

[MachineGhost]

BTW For some reason he thinks Romney is shoe in.  Not sure why he is that confident. 

Really?  He's a rank-and-file Republican.

[MachineGhost]

The same rules should apply to gold.

It seems to me holding gold in a tax deferred account (or not reporting physical sales) is even more critical then.  It is your one and only resort against currency depreciation.