Arizona lawmakers passed legislation this week that would make privately made gold and silver coins legal tender, and it now awaits governor Jan Brewer’s signature. According to Reuters, Arizona would be the second state to enact such a law, following Utah’s doing so in 2011.
The law would take effect in mid 2014, and businesses could choose whether or not they wanted to accept the new currency. The bill’s sponsor said it is still a “work in progress” but wants to “build on it.” Arizonans would not be able to pay taxes in gold or silver, but the bill would look to exclude profits made from investments in gold and silver from capital-gains tax. The metals’ new status under the law would exempt them, the bill’s sponsor claims, because ”the exchange of one form of legal tender for another does not give rise to liability for any type of tax.”
Supporters of gold and silver as legal tender often cite worries about the strength of the dollar and a fears of inflation. Critics of the bill have expressed concerns about businesses’ ability to properly measure the metals’ value and “making [Arizona] a laughingstock.”