(Trenton, New Jersey) – The New Jersey legislature has passed a bill to become the 44rd state in the country to end sales taxes on the purchase of physical gold and silver, pending action by Gov. Phil Murphy.
Assembly Bill 5294, sponsored by Majority Leader Asm. Louis Greenwald (D-6), Asw. Lisa Swain (D-38, and a bipartisan coalition of 13 other cosponsors, passed out of the full Assembly by a vote of 74-0 and sailed through the state Senate by a vote of 36-0.
The measure would apply to receipts received from retail sales made on or after the first day of the fourth month following the date of enactment.
Backed by the Sound Money Defense League, Money Metals Exchange, and in-state dealers and investors, this legislative victory is built upon a multi-year grassroots campaign waged by sound money activists. Other key supporters in the legislature included Sen. Paul Sarlo (D-36), Sen. Doug Steinhardt (R-23), and the late Asm. Ronald Dancer (R-12).
Executive Director of the Sound Money Defense League, Jp Cortez, testified in Trenton in support of the measure before both the Assembly and Senate committees.
Taxing all precious metals purchases has become an outmoded and even controversial practice in the United States. If this bill becomes law, only six states will still engage in it.
Every one of New Jersey’s neighbors (Delaware, New York, and Pennsylvania) had already stopped taxing the monetary metals.
The New Jersey sales tax on gold and silver had been discouraged citizens from protecting their savings against the devaluation of the dollar – or driving them to look for out-of-state options.
Eliminating sales taxes on gold, silver, and other precious metals is good public policy for several reasons:
- Levying sales taxes on gold and silver 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.
- 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.
- Taxing gold and silver harms in-state businesses. It's a competitive marketplace, so buyers will take their business to neighboring states, such as Delaware, New York, or Pennsylvania (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 $121.88 in sales taxes, for example, on a $1,950 purchase of a one-ounce gold bar.
- Taxing precious metals is unfair to certain savers and investors. Gold and silver are held as forms of savings and investment. New Jersey does not tax the purchase of stocks, bonds, ETFs, currencies, and other financial instruments.
- 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 Jerseyans on fixed incomes, wage earners, savers, and more.
Only six states (New Mexico, Hawaii, Wisconsin, Kentucky, Maine, and Vermont) still participate in the outmoded practice of taxing purchases of constitutional sound money. Of these six outliers, legislative allies in four states introduced sales tax exemption bills, with efforts in Kentucky, Wisconsin, and Vermont still ongoing.
Related bills to restore sound, constitutional money have also been introduced this year in Alaska, Georgia, Indiana, Iowa, Kansas, Kentucky, Oklahoma, Vermont, West Virginia, more.
Currently New Jersey is tied for 49th out of 50 in the 2024 Sound Money Index. Passage of this measure will increase the state's ranking dramatically.
