States don’t impose sales taxes on most traditional paper investments, so why single out gold and silver investments as being subject to sales taxes? Intentionally or otherwise, state sales taxes punish citizens who use precious metal investments as part of an overall long-term savings strategy.
Many financially responsible individuals choose to keep their reserves in physical form, such as gold and silver bullion coins, which may raise tax questions in California. But is there sales tax applicable on such purchases?
Why Are States Levying Sales Taxes on Precious Metals?
California sales tax applies to bullion purchases between $1,500 and $2,000. This represents an enormous disincentive to potential investors considering purchasing precious metals as long-term savings vehicles, especially since precious metals have historically proven reliable for long-term investing strategies such as medical bills, house repairs or job loss. Taxing these purchases would penalize people for adhering to responsible and diverse savings strategies.
State taxes on precious metals are an outdated and inequitable form of redistribution. While most states don’t tax gold and silver purchases, those that do create barriers to using sound money. Stocks, bonds, and ETFs do not attract sales taxes so why should precious metals?
Mississippi officials recently adopted legislation to cease imposing sales taxes on precious metals, with several other states looking to follow suit. By creating exemptions and freeing precious metals from bureaucratic restrictions, momentum could gain to move towards recognising gold and silver as money as per Article VI of the US Constitution – thus dismantling Federal Reserve’s hold over physical bullion savings while encouraging more Americans to acquire bullion as savings vehicles.
Imposing a Sales Tax on Precious Metals Deters Investment
State legislatures across the nation are beginning to understand that precious metals serve more functions than simply consumer items. Lawmakers recognize their store of value, protection against Bidenomics inflation, and as forms of money – as such it makes no sense taxing these commodities as commodities like stocks and bonds.
Imposing sales taxes on precious metals actually discourages investment and harms businesses that trade these precious metals, since those who might invest in the precious metals instead turn their investments elsewhere; people that would normally buy into precious metals instead invest elsewhere – leading them to states without sales taxes on these products, thus depriving the taxed states of revenue.
As a result of sales taxes on precious metals, coin conventions and bullion dealers often opt out of states with sales taxes, forcing their customers to travel elsewhere for purchases. This puts these business owners at an unfair competitive advantage while jeopardizing industry growth overall.
More and more state legislatures recognize that sales taxes on precious metals damage industry growth and discourage investment, so they are working towards passing laws to abolish such unfair taxes. While some states still impose capital gains taxes, those investing in gold or silver shouldn’t have to pay extra taxation fees when doing so.
Imposing a Sales Tax on Precious Metals Deters Trading
Financially prudent individuals often store physical precious metals as reserves to safeguard themselves against unexpected events. Such assets offer them security from economic shocks by serving as an alternative source of wealth outside their bank accounts or retirement funds that they can spend when other income sources dry up. Imposing sales taxes on such investments punishes citizens for adhering to sound investment strategies while actively discouraging saving with these safe assets.
Studies have proven that states’ sales taxes on gold and silver sales is an inefficient and unfair form of revenue collection that discourages economic activity as businesses, coin conventions and investors opt for states without sales taxes instead. Studies also revealed that state revenue collected through such sales taxes are far outweighed by economic activity lost as businesses, coin conventions and investors seek refuge elsewhere in no-tax states.
Money Metals Exchange and the Sound Money Defense League’s efforts have helped a number of states reduce or abolish sales taxes on precious metal purchases, with Mississippi bureaucrats formalizing this practice and officially ending sales tax for gold and silver investments after four years of campaigning against it. Now, our advocacy of gold and silver as money will reach West Virginia where legislation will soon be introduced that would permanently exempt precious metals purchases from state sales taxes.