[Congressional Record Volume 149, Number 41 (Thursday, March 13, 2003)]
[Senate]
[Page S3732]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. REID (for himself, Mr. Ensign, Mr. Allard, Mr. Miller, and 
        Mr. Crapo):
  S. 611. A bill to amend the Internal Revenue Code of 1986 to treat 
gold, silver, and platinum, in either coin or bar form, in the same 
manner as stocks and bonds for purposes of the maximum capital gains 
rate for individuals; to the Committee on Finance.
  Mr. REID. Mr. President, last Congress, I introduced the Fair 
Treatment for Precious Metals Investors Act to correct a flawed capital 
gains tax definition, which includes precious metals investments as 
``collectibles.'' This simple flaw in the tax code has discouraged 
investments in gold and other precious metals for nearly fifteen years. 
I rise today to reintroduce the Fair Treatment for Precious Metals 
Investors Act to correct this problem.
  My State, Nevada, is the third largest producer of gold in the world 
behind Australia and South Africa. Largely because of Nevada's exports, 
America enjoys a good trade surplus of more than $1 billion. U.S. gold 
is purchased around the world in financial markets from London to 
Zurich to Hong Kong.
  Historically, precious metals investments derived their value from 
their rarity. Today, however, precious metals coins and bars are 
specifically designed and produced by governments to be used as an 
investment vehicle for those commodities similar to stocks and bonds. 
My legislation will correct the outdated tax classification of precious 
metal bullion and apply to precious metals holdings the same capital 
gains tax treatment as stocks, bonds, and mutual funds.
  In 1997 and 1998, The Taxpayer Relief Act and the Internal Revenue 
Service Restructuring and Reform Act set two basic types of capital 
gains tax rates: short-term capital gains, which are taxed at between 
15 and 39.6 percent, and long-term capital gains which are taxed at a 
maximum rate of 20 percent. Long-term capital gains attributable to 
investments defined as ``collectibles'', (vintage wines, rare coins, 
and the like), however, are taxed at a maximum rate of 28 percent. 
Although precious metal bullion coins are intended to be used as 
investments in the precious metals they contain, they are still 
classified as ``collectibles'', and are taxed at the 28 percent maximum 
rate. The Taxpayer Relief Act allowed precious metal bullion coins held 
in IRA accounts to be taxed at the same rate as stocks and other 
capital assets. The bill I introduce today would treat all precious 
metal investments with the same tax equity.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 611

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Fair Treatment for Precious 
     Metals Investors Act''.

     SEC. 2. GOLD, SILVER, AND PLATINUM TREATED IN THE SAME MANNER 
                   AS STOCKS AND BONDS FOR MAXIMUM CAPITAL GAINS 
                   RATE FOR INDIVIDUALS.

       (a) In General.--Subparagraph (A) of section 1(h)(6) of the 
     Internal Revenue Code of 1986 (relating to definition of 
     collectibles gain and loss) is amended by striking ``without 
     regard to paragraph (3) thereof'' and inserting ``without 
     regard to so much of paragraph (3) thereof as relates to 
     palladium and the bullion requirement for physical possession 
     by a trustee''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2002.
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