Legislature(2023 - 2024)ADAMS 519

04/17/2023 01:30 PM House FINANCE

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HOUSE BILL NO. 3                                                                                                              
     "An  Act relating  to  specie as  legal  tender in  the                                                                    
     state; and relating  to borough and city  sales and use                                                                    
     taxes on specie."                                                                                                          
3:03:44 PM                                                                                                                    
REPRESENTATIVE   KEVIN  MCCABE,   SPONSOR,   gave  a   brief                                                                    
introduction to  HB 3.  He read  from the  sponsor statement                                                                    
(copy on file) as follows:                                                                                                      
     The  purpose   of  HB  3   is  to   recognize  Alaska's                                                                    
     constitutional duty, power and  right under Section 10,                                                                    
     Article I,  of the United States  Constitution, and the                                                                    
     Tenth Amendment  of the  United States  Constitution to                                                                    
     make gold  and silver  legal tender  in the  payment of                                                                    
     HB 3 will  secure the rights of citizens  of this state                                                                    
     under  the Ninth  and Tenth  Amendments  of the  United                                                                    
     States Constitution  to tender  gold and silver  in the                                                                    
     payment of  a debt should  the merchant or  payee agree                                                                    
     to accept it.                                                                                                              
     This bill  will bring Alaska into  full compliance with                                                                    
     the  United  States  Constitution  with  the  policies,                                                                    
     practices, and  procedures of  this State  with respect                                                                    
     to the use of gold,  silver, and specie as legal tender                                                                    
     in the payment of debt.                                                                                                    
Representative  McCabe  added  that   12  other  states  had                                                                    
already  passed  similar  legislation  to  accept  gold  and                                                                    
silver  coins  as legal  tender.  Tennessee  had passed  its                                                                    
legal  tender bill  in  the current  year  and Missouri  and                                                                    
Minnesota   would  be   soon  hearing   a  version   of  the                                                                    
legislation.  As of  2022,  there were  42  states that  had                                                                    
removed some or  all of the taxes from the  purchase of gold                                                                    
and   silver.  He   continued  reading   from  the   sponsor                                                                    
     This  bill  will  preserve, protect,  and  promote  the                                                                    
     state and  its economic  security, safety,  health, and                                                                    
     welfare of the  people of this state;  and protect this                                                                    
     state  and   its  citizens   in  the   acquisition  and                                                                    
     possession of  gold and silver  and their use  as legal                                                                    
     tender in the payment of debt.                                                                                             
Representative McCabe  noted that his office  was working on                                                                    
a modification  to Article  5, Subparagraph  C of  the bill.                                                                    
The  section   tasked  the  House  Finance   Committee  with                                                                    
studying  the possibility  of establishing  additional forms                                                                    
of legal tender  for various expenses, and  the change would                                                                    
move  that  responsibility  to the  Legislative  Budget  and                                                                    
Audit  Committee   (LB&A).  The  change  was   suggested  by                                                                    
Representative Hannan in  the prior year and  he agreed that                                                                    
LB&A would  be better suited  for the job. He  concluded his                                                                    
comments and offered to                                                                                                         
Co-Chair Foster  suggested that the invited  testifier speak                                                                    
on the bill.                                                                                                                    
3:06:43 PM                                                                                                                    
JP  CORTEZ, POLICY  DIRECTOR, SOUND  MONEY DEFENSE,  thanked                                                                    
the committee  for hearing HB  3 and stated his  support for                                                                    
the bill. He  understood that Alaska did not  charge a sales                                                                    
tax on  purchases of goods, but  boroughs and municipalities                                                                    
occasionally chose  to charge a  sales tax. He  thought that                                                                    
sales taxes discouraged Alaskans who  wished to own gold and                                                                    
silver to  protect their  savings at a  time of  record high                                                                    
inflation. The  bill would ensure  that there were  no taxes                                                                    
or  disincentives  to  prevent   Alaskans  from  owning  the                                                                    
precious metals. He reiterated that  the bill would also put                                                                    
Alaska in compliance with the U.S. Constitution.                                                                                
Mr. Cortez continued  that one of the reasons  that the bill                                                                    
was  important was  because investments  were not  typically                                                                    
subject to sales  tax. There were 42 states  that had active                                                                    
legislation to  eliminate sales  taxes from  precious metals                                                                    
and reaffirm  gold and  silver as  legal tender.  He relayed                                                                    
that there was  currently a similar bill  on the Mississippi                                                                    
governor's desk  and once signed, it  would make Mississippi                                                                    
the forty-third state to pass  similar legislation. He added                                                                    
that Missouri and  Arkansas also had bills  to reaffirm gold                                                                    
and silver  as legal tender  and the bills  were anticipated                                                                    
to pass  within the following  week. In 2023, there  were 25                                                                    
states  that had  introduced similar  legislation to  either                                                                    
remove taxes from  the purchase or from the  sale of metals.                                                                    
He indicated that HB 3  would also allow the state treasurer                                                                    
to invest state funds in  physical holdings to establish in-                                                                    
state depositories. He thanked the committee for its time.                                                                      
Co-Chair  Foster reminded  the  committee that  there was  a                                                                    
meeting with  the governor in  21 minutes and he  planned to                                                                    
spend 15 minutes on each of the bills on the agenda.                                                                            
Representative Josephson understood  that Alaska was already                                                                    
in compliance with the US  Constitution; however, the system                                                                    
to use  gold and silver was  simply not in place.  It was an                                                                    
option  for  the  state,  but  the state  was  not  in  non-                                                                    
compliance  by not  engaging  in the  system.  He asked  Mr.                                                                    
Cortez if his understanding was accurate.                                                                                       
Mr.   Cortez  responded   that  Representative   Josephson's                                                                    
understanding  was accurate.  He  indicated  that one  could                                                                    
make the  argument that taxes  or impediments on  using gold                                                                    
and silver as legal tender  were in opposition to the spirit                                                                    
of the U.S. Constitution.                                                                                                       
3:10:22 PM                                                                                                                    
Representative Ortiz asked if any  other states had begun to                                                                    
use gold and  silver in normal transactions.  He wondered if                                                                    
it had created any confusion in the business world.                                                                             
Mr. Cortez responded  that some states had begun  to use the                                                                    
system.  He  emphasized that  there  was  no obligation  and                                                                    
businesses  could  choose  to accept  or  decline  gold  and                                                                    
silver  as a  form  of currency.  There  were businesses  in                                                                    
other states and  countries that had decided  to accept gold                                                                    
backs as currency.                                                                                                              
Representative Ortiz  asked why there  was a recent  push to                                                                    
establish  the system  in  the current  year  as opposed  to                                                                    
beginning the process years ago.                                                                                                
Mr. Cortez responded that the  world was in an unprecedented                                                                    
monetary  period.  Advocates  of  gold  financing  had  been                                                                    
predicting that  a time of  high inflation  would inevitably                                                                    
arrive, and it  had. He opined that paper money  had been an                                                                    
experiment   for   decades   and  that   state   treasurers,                                                                    
investment  groups, and  citizens  were "waking  up" to  the                                                                    
realization that "paper  money is just that" and  it was not                                                                    
as established as gold and silver.                                                                                              
Representative  Stapp  asked  if   capital  gains  would  be                                                                    
applicable if an individual were  to purchase gold or silver                                                                    
and sell it for profit in a year's time.                                                                                        
Mr. Cortez responded that federal  gains would be applicable                                                                    
but there would be no  applicable state taxes because Alaska                                                                    
did not have a state income tax.                                                                                                
3:13:53 PM                                                                                                                    
Representative  Galvin asked  how many  decades paper  money                                                                    
had been an experiment.                                                                                                         
Mr. Cortez responded  it had been five  decades, starting in                                                                    
Representative  Galvin  stated  her understanding  that  Mr.                                                                    
Cortez thought  that the  world needed to  "wake up"  to the                                                                    
gold and  silver standard. She  was also hearing  from young                                                                    
people that  the world needed  to wake  up to the  idea that                                                                    
money was abstract and could  be traded online. There seemed                                                                    
to  be a  wide  spectrum as  to how  money  was viewed.  She                                                                    
wondered what  the advantages would  be to returning  to the                                                                    
gold and silver standard  as opposed to using cryptocurrency                                                                    
and other online monies.                                                                                                        
Mr. Cortez responded  that prior to 1971,  barring the years                                                                    
during which the country was  involved in a world war, there                                                                    
was no  inflation. He thought official  inflation numbers in                                                                    
the  present day  were close  to 7  percent. Individuals  on                                                                    
hourly wages,  individuals with fixed incomes,  and retirees                                                                    
were  most harmed  by inflation.  It was  difficult to  make                                                                    
long-term plans when the  economic environment was unstable.                                                                    
He opined  that it was  easier to make long-term  plans when                                                                    
one could  rely on a  stable unit  of currency that  was not                                                                    
being manipulated.                                                                                                              
Representative  Galvin  asked  for   a  description  of  the                                                                    
difference between the  price of oil changing,  the price of                                                                    
gold changing, and the inflationary  costs of goods. She was                                                                    
trying  to  understand his  argument  that  gold bars  would                                                                    
eradicate inflation.                                                                                                            
Mr. Cortez  responded that  from 1931 to  1971, there  was a                                                                    
floating exchange rate. Prior  to 1931, the traditional gold                                                                    
standard  required that  a  dollar be  attached  to a  fixed                                                                    
amount  of gold.  There was  a  period of  nearly 100  years                                                                    
where  there  was no  inflation  in  the United  States.  He                                                                    
acknowledged that  there was some  movement in the  price of                                                                    
gold as  it was a global  market and one of  the most liquid                                                                    
markets in existence. Silver was  a production metal and was                                                                    
used  in jewelry,  cars, and  other  technologies and  there                                                                    
were  industrial reasons  for  the movement  of silver.  The                                                                    
difference between  gold and  silver was  that gold  was not                                                                    
necessarily traded as an industrial metal.                                                                                      
Mr. Cortez continued that there  were certain countries that                                                                    
were stockpiling  the available  gold supply to  bolster the                                                                    
countries' treasuries.  It was difficult for  individuals to                                                                    
trade  commodities such  as oil,  but gold  and silver  were                                                                    
generally uniform assets regardless  of one's background and                                                                    
nationality. He indicated that gold  was a universal trading                                                                    
instrument  and  had  a  fixed quantity  in  addition  to  a                                                                    
longstanding  history  of  stability.   He  thought  it  was                                                                    
important that gold was mentioned  in the U.S. Constitution.                                                                    
He concluded that for the  reasons mentioned, gold should be                                                                    
placed in a different category than other commodities.                                                                          
3:19:30 PM                                                                                                                    
Co-Chair  Foster  asked if  Mr.  Cortez  would be  available                                                                    
online as  a resource for  future committee meetings  on the                                                                    
Mr. Cortez responded that he would be available.                                                                                
HB  3   was  HEARD  and   HELD  in  committee   for  further                                                                    

Document Name Date/Time Subjects
HB3.VerB.SectionalAnalysis.4.11.23.pdf HFIN 4/17/2023 1:30:00 PM
HB 3
HB3.VerB.SponsorStmt.4.11.23.pdf HFIN 4/17/2023 1:30:00 PM
HB 3
HB3.VerB.SupportingDocsLetters.4.11.23.pdf HFIN 4/17/2023 1:30:00 PM
HB 3
HB 83 Sectional Analysis.pdf HFIN 4/17/2023 1:30:00 PM
HB 83
HB 83 Supporting Document AMA 3.13.2023.pdf HFIN 4/17/2023 1:30:00 PM
HB 83
HB 83 Sponsor Statement.pdf HFIN 4/17/2023 1:30:00 PM
HB 83
HB 83 Supporting Document APHA 3.8.2023.pdf HFIN 4/17/2023 1:30:00 PM
HB 83
HB 83 Supporting Document ATA 3.27.2023.pdf HFIN 4/17/2023 1:30:00 PM
HB 83
HB 83 Supporting Document CACFA Audit Report 04.08.2020.pdf HFIN 4/17/2023 1:30:00 PM
HB 83
HB 83 Supporting Document CAP 3.13.2023.pdf HFIN 4/17/2023 1:30:00 PM
HB 83
HB 83 Supporting Document Cunning 3.15.2023.pdf HFIN 4/17/2023 1:30:00 PM
HB 83
HB 83 Supporting Document SCI AK 3.1.2023.pdf HFIN 4/17/2023 1:30:00 PM
HB 83
HB 83 Supporting Document SCI AK SCI Kenai 3.21.2023.pdf HFIN 4/17/2023 1:30:00 PM
HB 83
HB 83 SB 34 Support Letter Charlie Lean 4.14.23.pdf HFIN 4/17/2023 1:30:00 PM
HB 83
SB 34
HB 83 NEW FN DNR 041423.pdf HFIN 4/17/2023 1:30:00 PM
HB 83