(Frankfort, Kentucky) -- Kentucky aims to become the 44th state in the country to end the sales tax on purchases of gold and silver.
Language introduced by Rep. Doan and a contigent of liberty-minded legislators has been included in the House budget bill, HB 8. This bill was then approved by the House Appropriations and Revenue committee, as well as the full House of Representatives. The bill now goes to the Senate Appropriations and Revenue committee, where the effort stalled last year.
There are strong public policy reasons why so few states still impose a sales tax on precious metals purchases… and why ending this tax in Kentucky should move forward without delay:
-Taxing gold and silver harms in-state businesses. It’s a competitive marketplace, so buyers will take their business to neighboring states, thereby undermining Kentucky 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 $117 in sales taxes, for example, on a $1,950 purchase of a one-ounce gold bar.
-Other types of savings or investment do not carry a sales tax. Gold and silver are held as forms of savings and investment. Kentucky does not assess a sales tax on the purchase of stocks, bonds, ETFs, real estate, currencies, and other financial instruments.
-Levying sales taxes on precious metals makes no sense because they held for resale. 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 imposition of sales taxes on precious metals illogical from the start.
-Studies have shown that taxing precious metals is an inefficient form of revenue collection. The results of a Michigan study, for example, demonstrated that any sales tax proceeds a state collects on precious metals may be 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 Kentucky’s neighbors (Illinois, Indiana, Missouri, Ohio, Tennessee, Virginia, West Virginia) have already stopped taxing gold and silver.
-Gold and silver are the only money mentioned in the U.S. Constitution. Article 1, Section 10 states that “no state shall make any Thing but Gold and Silver a tender in payment of debts.” Exchanging one form of U.S. money for another should not be taxed.
-Taxing precious metals is harmful to smalltime savers. Purchasers of precious metals aren't usually 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, Kentuckians on fixed incomes, wage earners, savers, and more.
More than a dozen states have introduced pro-sound money legislation in 2024 so far, including Alaska, Indiana, Iowa, Georgia, Kansas, Missouri, New Hampshire, Nebraska, New Jersey, Oklahoma, Vermont, West Virginia, Wisconsin, and more.
Img credit: BlinxTheKitty, Wikimedia Commons
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.
