Andover voters to decide on silver dollars as pay alternative for town employees

[jeff of pa]

An employee making $1,000 a week, for instance, may choose to receive half of those wages in silver coins: The town would pay $500 in paper dollars and $500 based on the exchange rate of the silver coins, Shapiro said. Based on the January exchange rate, $500 would be the equivalent of roughly 14 silver coins. So the employee would receive $514 ($500 in paper dollars and $14 in silver coins) in wages, instead of $1,000, thereby falling to a lower tax bracket and paying less in taxes, Shapiro said.

The tax savings also would apply to the town, as it would only have to withhold taxes on the face value - not the higher market value - of the coins, he said.

http://www.boston.com/news/local/ar...ollars_as_pay_alternative_for_town_employees/

 

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[chukers]

I don't know what kind of responses you are are looking for here but here is my thoughts on it.

As a silver collector and in the long run that would be great... but if this is part of their regular pay check its like getting a pay cut because money they are getting in silver isn't money they could spend on everyday expenses. its kinda like forcing you to put half your paycheck into savings.

Sure they could sell the silver and get their money but isn't that income too?

Chukers

 

[jim4silver]

The questions I would have would be 1) Is there a premium added to the ASEs, or do they get them at spot?, and 2) Does anyone really think the IRS is going to let the person claim reduced wages because they received silver coins that have a face value stamped on them that is in no way related to their actual value?

I can answer 2), and that is NO WAY! I can tell you they would make a new rule (if there is not one already) that will base the employee's income on the value of the metals received, not what is stamped on them. Even if they did allow it, the employer would not be willing to do this for long because the employer would only be able to claim the face value as far as business expenses if that is what the employee is claiming as income. Thus, the employer would be paying spot (plus premiums) for the silver to pay the employees, but only deducting the face value as a business expense. No business or gov agency would do that because they would be losing on the deductions.

I think ideas like the one mentioned in the article are good in that it shows people are at least thinking about the value of PMs like silver and gold, but I personally don't see them working over the long haul.

Just my opinion.

Jim

 

[Marchas45]

My opinion (and only my opinion) is they would have to pay income tax on there wages no matter what there paid in. Maybe their talking about payment after taxes. We where talking about this Jim as I said in my PM there is no sales tax on Bullion according to my Tax person but for a town to get the coins they would have to go direct to the mint and cut out the Bullion dealers (Only Dealers can buy AE's from the mint) to save on premiums to make it work but I don't think it will happen that way.
Sure would like to see it happen.

 

[Marchas45]

Heck I just read that again, if you work 40 hrs at $10.00 an hr that's $400.00 that you will be taxed on before payment. What the heck is he talking about? They will save on taxes. Am I missing something? The only benefit would be that if the price of silver goes up then the employees would be sitting pretty with their holdings.

 

[jim4silver]

Heck I just read that again, if you work 40 hrs at $10.00 an hr that's $400.00 that you will be taxed on before payment. What the heck is he talking about? They will save on taxes. Am I missing something? The only benefit would be that if the price of silver goes up then the employees would be sitting pretty with their holdings.

Charlie,

My take on reading the article is that they would pay the employees half of their wages in fiat, and the other half in silver. The half that would be paid in silver would be an amount of silver worth what half of the salary is (according to the current spot price). However, the article infers that the employee would only have to claim on their income taxes the face value of the silver ($1 for each ASE they received) and not what it was worth via the spot market (right now approx $34 without premiums). I cannot imagine anyone would really think that is a possibility with the tax laws or that the IRS would let that happen.

But even if the IRS did allow this, whoever it is that is buying the ASEs would be losing because if the employees were allowed to only claim the face value of the silver on their taxes and not the spot value, the employer would only be able to deduct as a business expense the face value of the silver paid to the employee and not what they paid for it-spot price (wages are tax deductions for companies). Thus, the business would not get the full deduction. The IRS would never let them have it both ways--ie, the business deduct the full value (spot price paid) of the silver paid to the employees and the employee get to claim just the face value of the silver on their income taxes as wages.

That is just my take on the article, maybe I am wrong?


Jim

 

[jeff of pa]

On the taxes I think they can get away with it,
until they sell. a Silver Dollar is only worth $1.00
till someone gives you $35.00 for it.
Then you Earned $34.00
at least that is my Take.

However If a Buisness must pay Minimum wage,
Can the books be Legally Cooked to reflect the Difference ?

I Guess all these Questions & Their answers
are some of the reasons Things would
need to be voted on & Spelled out in Writing.

What if someone went to unemployment
& Signed up for a Partial ?

 

[FreedomUIC]

Many employers have to pay several different kinds of tax for an Employee.
FUTA, SUTA, Workmens Comp Insurance, Federal Withholding, State Withholding, SS, Medicare and so on. It is all based
on the employees wages from what I remember from college, some range upwards of 15 - 20 % of the employees gross
income. This doesn't even take into consideration those employers who are kind enough to contribute to a 401K based
on what the employee deposits into their retirement account.

I would almost say that with a mid range company, the offset would be in favor of the the employer. Take an employee that
makes $10.00 dollars an hour and works 40 hours a week. That amounts to pretax money of $400.00 Multiply that by
the customer 35% that just the employeer pays and he contributes $140.00 dollars to the various organizations that suck a small
to mid-range company of their money. That $400 dollars cost the company an additional $140 in taxes, insurance and so on.

Same employee working 40 hours a week would get a check for $200 dollars and six ASE's for pay. Those six ASE's cost the company approx. $200.00 if purchased in bulk through a dealer, or maybe get a dealers license and by directly from the mint
for a lower premium.

$200 X 35% = $70.00 dollars the employeer has to pay the government or a savings of $70.00 dollars per week. That would amount to a tax bill of $70.00 dollars in Fiat money and then roughly $198 dollars in silver based on silver price. This totals
roughly $270.00 over $70.00 dollars in extra money. If said company does away with contributing to 401k's and so on, it
would probably be a small percentage of money the company saves. Say the amount comes to $5.00 per employee and there
are 100 employees in the business. That is $500 a week the company saves or roughly $26,000 thousand dollars a year.

The article mentions Silver Dollars, not necessarily ASE's. You can get scads of 1922 Peace dollars and 1921 Morgan dollars for
far less than what an ASE would cost. That would make the numbers fall in line a little easier than using .999 silver bullion.

 

[DigginThePast]

These guys are not the first to think of this.

However, as we see more folks trying this idea I believe what we'll see is the demonetization of "any coin not of current metallic content of current circulating coins" thus removing legal tender status from silver and gold circulating coins from the past as well as NIFC, but legal tender, American Eagle Bullion coins.

Then if one were to receive silver dollars, or similar, in payment it would be viewed as barter as far as taxing authorities go.

Then we have to look at the inputs and outputs as far as the idea goes. A company or municipality buys silver dollars for $35 each and pays out at $1 each. That $34 loss per coin could add up and be quite substantial. A private company could benefit from the loss but could also suffer a credit rating reduction and loss of borrowing ability. A municipality could have credit and bond issues due to the loss as well as those in charge could be facing charges of incompetence, negligence or even fraud depending on how the loss is reported. It is a slippery slope but an interesting loophole.