Liberty Watch has posted an excellent article about the rapidly growing in fame legal case in which a Las Vegas businessman was not found guilty for paying his employees with old US gold coins, which the businessman and his employees valued at face instead of their Federal Reserve note value.
One hundred sixty-one counts were lodged against numerous persons, but the jury delivered zero guilty verdicts. Three defendants were acquitted, but two other defendants were partly acquitted as the jury hung on one count each. The jury also hung on all counts faced by the businessman and two associates, resulting in mistrials. The government has not yet revealed whether it will re-file charges.
The results are especially fascinating because hard money advocates long have said that a $20 gold coin, regardless of when minted, has a monetary value under law of only twenty dollars. They aver that if an employee is paid a Double Eagle ($20 gold coin), he has an income of $20, not the number of Federal Reserve notes (FRNs) for which the coin could be converted, now at more than $800.
At the heart of the issue lies the fact that there is no law that differentiates among monies minted of different materials of varying intrinsic values. Before 1934, the Treasury turned out $20 gold coins and $20 gold certificates, which circulated as money because they could be converted at any bank into $20 gold coins. Over the years, through machinations only possible because of the force of government, gold certificates were replaced by FRNs. Still, Congress has made no distinction among old gold coins, base metal coins, and paper money.
Consider this: two copper-nickel fifty-cent pieces have much greater intrinsic value than one paper dollar. Still, they command the same value as money. So, why does a government-issued $20 Double Eagle have to be valued differently, for income tax purposes, while there is no difference between two half-dollars and a paper dollar?
The IRS was supposed to notify the judge in late October if the agency intended to retry the defendants whose cases were hung. The government waffled, indicating they would pursue another grand jury and issue superseding indictments.
It is my guess that the IRS will pursue the issue. The last thing the IRS wants is workers being paid in pre-1965 US 90% silver coins and those workers filing tax returns at 10% of what they would have filed if paid in FRNs. Still, it would not be a major financial problem for the government because there are not enough pre-1965 US 90% silver coins and old US coins to make a dent in the government’s income tax revenue. For the IRS, though, I’m sure it’s a “matter of principle.”