With Gov. Jim Pillen’s signature, Nebraska has become the 12th state to end capital gains taxes on sales of gold and silver.
Under LB 1317, any “gains” or “losses” on precious metal sales reported on federal income tax returns are backed out, thereby removing them from the calculation of a Nebraska taxpayer’s adjusted gross income (AGI).
Backed by the Sound Money Defense League, Money Metals Exchange, and in-state advocates, the sound money measure passed out of the unicameral legislature’s Revenue Committee unanimously before being amended into a must-pass bill by a vote of 27-5.
Sponsor Sen. Ben Hansen, said upon news of the formal enactment of his legislation, “I was extremely pleased to see LB 1317 signed into law. Gold and silver are the only forms of currency mentioned in our Constitution and with that comes the people's ability to use it as such without penalty from the government. Saving, and using, gold and silver is our right and one of the only checks and balances to our federal government's unending devaluation of our paper currency. ”
Gold and silver ownership serves as a hedge against the devaluation of the dollar due to Federal Reserve policies. Consequently, taxpayers often realize 'gains' when converting the monetary metals back into Federal Reserve notes (i.e. selling) that do not reflect any increase in real value but rather reflect the currency’s ongoing devaluation.
Despite the lack of “real” gains, the Internal Revenue Service imposes capital gains taxes on such transactions. Nebraska has now opted out at the state level, declining to carry the IRS’s position into the definition of Nebraska income.
Jp Cortez, executive director of the Sound Money Defense League, explained during his testimony before the Revenue Committee that the ferocious wave of inflation facing Nebraskans is largely caused by harmful actions of the Federal Reserve.
“The state can take a different course and provide Nebraska citizens cleaner access to gold and silver ownership – and these metals are not only a proven inflation hedge but states all over the country are remonetizing constitutional sound money in the form of gold and silver,” Cortez said.
Eleven other states already do not charge an income tax on sales of precious metals, with Arkansas, Arizona, and Utah recently enacting such laws. Meanwhile, Iowa, Georgia, Oklahoma, Missouri, West Virginia, and Kansas are actively considering similar legislation in 2024.
“Investments in precious metals coins and bullion in Nebraska are now rightly exempt from both sales tax and income tax,” said Stefan Gleason, CEO of Money Metals and Chairman of the Sound Money Defense League.
“Neutralizing Nebraska's income tax treatment of the monetary metals removes significant disincentives in the Cornhusker State against the ownership and use of the monetary metals,” said Gleason.
Meanwhile, LB 1317 revises the state’s formal definition of money by adding language that states: “Money does not include central bank digital currency.”
The new law defines central bank digital currency as “a digital medium of exchange, token, or monetary unit of account issued by the United States Federal Reserve System or any analogous federal agency that is made directly available to the consumer by such federal entities. Central bank digital currency (CBDC) includes a digital medium of exchange, token, or monetary unit of account so issued that is processed or validated directly by such federal entities.”
Sen. Hansen said, “I believe we have to be extra vigilant in our assessment and application of a Central bank digital currency to make sure they do not become a danger to our freedom. For this reason, we defined in LB 1317 that CBDCs are not classified as currency in Nebraska, which should help protect against unwarranted mandates for their use in the future."
Versions of this “anti-CBDC language” have advanced or signed into law in Tennessee, North Carolina, Florida, South Dakota, and Indiana. Congressman Alex Mooney has also introduced a federal measure to block the Federal Reserve’s digital currency scheme.
In his testimony, Cortez discussed the potential risks of adopting a CBDC, including creating a greater ability to track all financial transactions, disallowing certain types of purchases, or even completely “turning off” a targeted individual’s access to money.
Nebraska joins Utah, Wisconsin, Kentucky, South Dakota, and Tennessee as states to have enacted pro-sound money legislation into law so far in 2024.
Currently ranked 22nd in the 2024 Sound Money Index, Nebraska’s ranking is expected to rise.
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