Kansas Legal Tender Act

Representative Michael Capps recently introduced HB 2285, the Kansas Legal Tender Act, into the state House and it is now in the House Committee on Taxation. This bill provides for sales exemption from and modification for sales of specie legal tender. 

Silver EagleKansas currently burdens you with sales taxes if you buy precious metals, and then charges capital gains taxes when you sell those same precious metals.  Passage would pave the way for Kansans to use gold and silver in everyday transactions and would remove sales tax when exchanging specie. Since money itself is not taxed, it only stands to reason you should not be taxed when you trade one currency for another.

The Kansas Legal Tender Act would end this unjust taxation!

Utah became the first state in over 80 years to pass a law making gold and silver coin legal tender in 2011.  The legislature followed up, approving a bill clarifying several tax measures and more importantly, expanding the definition of specie to include gold and silver coin approved by the state. Oklahoma, Alabama, Wyoming, Louisiana and Texas have also passed legislation recognizing gold and silver as legal tender.

I believe this legislation is justified by the United States Constitution which states in Article I, Section 10, “No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts.” States have simply ignored this constitutional provision for years as the Federal Reserve monopolized currency with their Federal Reserve Notes.

The U.S. Constitution established biblical commodity money as the only lawful medium of exchange in America and empowered Congress to coin silver and gold coins the values of which are to be “regulated” using a fixed standard of weights and measures. The value of the US dollar represented a certain equivalent weight in silver and could be redeemed in silver coins. The Constitution did not authorize printing paper money (Bills of Credit) – or Federal Reserve Notes circulating as money today. Only gold and silver coins were considered legal tender as a standard of payment.

Legal Tender

Congress adopted the Legal Tender Act of 1862, compelling people to accept paper notes in payment, and thus began circulating the first national United States currency. These bills of credit were known as Legal Tender Notes because of the inscription on each obverse face stating “This Note is a Legal Tender.” Legal tender or forced tender is payment that, by law, cannot be refused in settlement of a debt.

Remember, the U.S. Constitution prohibits any government from issuing what the Founding Fathers called “Bills of Credit” (and what we today would understand as paper currency redeemable in silver or gold), and outlaws any form of “legal tender” except silver and gold coins.

Art. I Sec. 10 Cl. 1, states, in part: “No State shall … coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; …”

This departure from the Constitution resulted in just as Frederic Bastiat predicted…

“When plunder has become a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it.” – Frederic Bastiat in “The Law”

In 1868 the Supreme Court unanimously said that nothing other than coined money had been recognized by the legislation of the national government as lawful money. (Bank vs. Supervisors, 7 Wallace, p. 30.) In Hepburn v. Griswold (1870), the Supreme Court found the acts creating the greenbacks to be unconstitutional, ruling that forcing a creditor to accept payment in inflated currency was a violation of the 5th Amendment, protection of property under due process. That decision was later reversed following the appointment of two new judges by President Ulysses S Grant.