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States Rush to Remove Taxes from Gold Sales

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I wrote this piece yesterday, but it deserves more attention, so I’m reposting it today. It’s very important to consider a gold and silver component as a portion of your investment portfolio in times like these.

Sound money advocates have been pushing states to remove sales taxes on the purchase of gold and silver, and it’s working. JP Cortez reports in FEE Stories that so far 42 states have removed some or all of their taxes on the purchase of gold and silver, and more states could soon join them. He writes:

To date, 42 states have removed some or all taxes from the purchase of gold and silver. And there are new bills pending now in five of the eight remaining states, i.e. Tennessee, Mississippi, Kentucky, Hawaii, and New Jersey.

Taxing the exchange of Federal Reserve Notes for the monetary metals is an atrocious policy, for several reasons.

States generally don’t tax the purchase of investments. States don’t slap sales taxes on the purchase of stocks, bonds, ETFs, currencies, and other financial instruments. Gold and silver are held as forms of savings and investment. So taxing precious metals penalizes a single class of savers and investors.

Taxing precious metals actually reduces a state’s tax revenues. A Michigan analysis revealed that the sales tax revenue extracted was actually exceeded by revenue lost from conventions, businesses, and economic activity driven out of the state.

And states with sales taxes on precious metals are at a competitive disadvantage to neighboring states that have ended the practice.

Taxing precious metals is harmful to citizens attempting to protect their assets. Purchasers of precious metals generally aren’t fat cat investors. Most who buy precious metals do so in small increments as a way of saving money.

People purchase precious metals, in part, to preserve their wealth against the ravages of inflation. Inflation especially harms the poorest among us, including pensioners, senior citizens on fixed incomes, wage earners, and savers.

Levying taxes on precious metals is illogical and inappropriate. Purchases of computers, shirts, and shoes are taxable to the final consumer. But precious metals are inherently held for resale, not “consumption,” making the entire notion of taxing their purchase illogical from the start.

Here is a quick rundown of pending sales tax repeal bills…

In the Bluegrass State, Rep. Kirk-McCormick introduced House Bill 272 last week to cancel Kentucky sales taxes on gold, silver, platinum, and palladium coins and bars.

In neighboring Tennessee, Rep. Gant and Sen. Stevens are pursuing a similar measure. Their efforts are bolstered by a newly released study by the Tennessee Advisory Commission on Intergovernmental Relations (TACIR) which encourages the Volunteer State to end the practice of taxing precious metals.

House Bill 514 and Senate Bill 870, introduced in 2021 by Rep. Gant and Sen. Stevens respectively, will be considered this spring.

Even as Kentucky and Tennessee legislators move forward, Mississippi may beat them to the punch in becoming the 43rd state to cancel sales taxes on the monetary metals.

So far, three such bills have been introduced in Mississippi: House Bill 426, House Bill 518, and House Bill 729, introduced by Rep. Ford, Rep. Hopkins, and Rep. Bomgar, respectively.

Hawaii is also poised to end state sales taxes on gold and silver. House Bill 1184, introduced by Rep. Okimoto, sailed through two committees last year, passing unanimously out of one… and passing overwhelmingly out of the other. (The bill was put on hold due to fears that enacting tax cuts could jeopardize Biden’s handouts to state legislatures last year.)

Meanwhile, legislators in New Jersey also hope to eliminate sales taxes on precious metals. Last year’s sound money tax exemption effort was led by Assemblyman Dancer and Sen. Doherty, and they are championing this cause in the Garden State again this session.

Alabama and Virginia are among the states already on the right side of the sales tax issue. However, both exemptions sunset this year.

Sound money allies have already mobilized, introducing measures to extend the life of those states’ exemptions – specifically, Senate Bill 13, sponsored by Sen. Melson in Alabama, and House Bill 936, sponsored by Del. Batten in Virginia.

Let’s hope they succeed, because re-imposing sales taxes on gold and silver has proven to be a debacle.

In recent years, the state of Ohio and Louisiana both experimented briefly with resuming taxation on precious metals purchases, only to reverse course after businesses, coin conventions, and state tax revenues exited the state.

Action Line: Inflation is ramping up, and owning forms of sound money is one way you can protect yourself. Americans are tired of watching their savings and salaries be eroded by rising prices. If you need help building a portfolio with inflation in mind, I would love to talk with you. If you would like to get to know me before we talk on the phone, there’s no better way than signing up for my free monthly Survive & Thrive letter. In the letter each month, I encourage and push you to achieve the personal and financial security goals you’ve set for your family. Click here to subscribe. We’ll get to know each other, and get serious about your future success.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.