(Trenton, NJ, USA – April 7, 2021) – A representative in the Garden State believes that taxing real money is wrong and he hopes to do something about it.
Introduced by Representative Ronald Dancer (12-R), Assembly Bill 5285 exempts sales of investment metal bullion and certain investment coins from the sales and use tax in New Jersey.
Under current law, New Jersey citizens are discouraged from insuring their savings against the devaluation of the dollar because they are penalized with taxation for doing so. Passage of this measure would remove disincentives to holding gold and silver for this purpose. AB 5285 is important for a few reasons:
New Jersey does not tax the purchase of any other investment. New Jersey does not tax the purchase of stocks, bonds, ETFs, currencies, and other financial instruments. Gold and silver are held as forms of savings and investment. Taxing precious metals is unfair to certain savers and investors.
Studies have shown that taxing precious metals is an inefficient form of revenue collection. The results of one study involving Michigan show that any sales tax proceeds a state collects on precious metals are likely surpassed by the state revenue lost from conventions, businesses, and economic activity that are driven out of the state.
The harm is exacerbated when you consider that all of New Jersey’s neighboring states (Delaware, New York, Pennsylvania) have already stopped taxing gold and silver. Even nearby Maryland, Connecticut, Massachusetts, and Rhode Island, have enacted their own sales tax exemptions for precious metals.
In total, 39 states have reduced or eliminated sales tax on the monetary metals.
Taxing gold and silver harms in-state businesses. It’s a competitive marketplace, so buyers will take their business to any neighboring state (all of which have eliminated or reduced sales tax on precious metals), thereby undermining New Jersey jobs. Levying sales tax on precious metals harms in-state businesses who will lose business to out-of-state precious metals dealers. Investors can easily avoid paying $130 in sales taxes, for example, on a $1,950 purchase of a one-ounce gold bar.
Levying sales taxes on precious metals is inappropriate. Sales taxes are typically levied on final consumer goods. Computers, shirts, and shoes carry sales taxes because the consumer is "consuming" the good. Precious metals are inherently held for resale, not "consumption," making the application of sales taxes on precious metals inappropriate.
Taxing precious metals is harmful to citizens attempting to protect their assets. Purchasers of precious metals aren't fat-cat investors. Most who buy precious metals do so in small increments as a way of saving money. Precious metals investors are purchasing precious metals as a way to preserve their wealth against the damages of inflation. Inflation harms the poorest among us, including pensioners, New Jerseyians on fixed incomes, wage earners, savers, and more.
This measure is one of many sound money bills being introduced across the country this year. Idaho is considering a measure to empower the state treasurer to hold physical gold and silver in state coffers. Bills to remove taxation on sound, constitutional money are also being, or have been, introduced in Alabama, Mississippi, Iowa, South Carolina, Tennessee, and more.
Backed by the Sound Money Defense League, these measures protect New Jersey citizens by removing barriers to insulating their wealth with the only money proven to protect against the Federal Reserve Note’s ongoing devaluation.
Jp Cortez is the Executive Director for the Sound Money Defense League, a non-partisan, national public policy group working to restore sound money at the state and federal level, and lead author of the Sound Money Index.
