Jp Cortez, executive director of the Sound Money Defense League, spoke to Bloomberg Tax on state sales tax laws pertaining to purchases of gold and silver coins and bullion. Read an excerpt below and read the full article here:
At least 44 states have either fully or partially repealed the sales tax on purchases of gold and silver, according to the Sound Money Defense League, a group funded by online dealer Money Metals Exchange.
Wisconsin Gov. Tony Evers (D) signed a bill last month to provide a sales and use tax carve-out for precious metal bullion, New Jersey is weighing a similar measure, and Kentucky lawmakers included it in an omnibus tax bill awaiting Democratic Gov. Andy Beshear’s signature.
The Sound Money Defense League has been crisscrossing the nation since 2015, calling on state lawmakers to grant the tax exemptions, Executive Director Jp Cortez said in an interview. The push has gained traction—in the last two years, exemptions for precious metal purchases have been approved in Alabama, Mississippi, Tennessee, and Virginia.
Other types of investments, like stocks and ETFs, aren’t charged sales tax, and precious investment metals should be no different, Cortez said. The league leans on a section of the US Constitution directing that no state shall “make any Thing but gold and silver Coin a Tender in Payment of Debts,” in arguing that exchanging one form of money for another shouldn’t be subject to tax.
“The visual or the idea that comes up in people’s mind is a rich person diving into a swimming pool of gold coins,” Cortez said. But that isn’t the case, he added, with most precious metals investors “trying to save for retirement and store value in their money at a time where inflation is a problem on everyone’s mind.”
But states that nix the sales tax on bullion and coins risk losing revenue at a time when many state capitols are starting to feel pinched by the end of federal pandemic relief funds. New Jersey Gov. Phil Murphy (D) pocket-vetoed a bill earlier this year to exempt investment metal bullion and investment coins from sales and use tax. He didn’t provide a reason for the veto, but the bill’s Republican sponsor, Sen. Douglas Steinhardt, said in an interview that the move was “driven solely” by a fiscal impact statement showing the hit to the state could exceed $4.8 million.
Steinhardt said his reintroduced measure, S721, could have a better shot because the financial estimate now includes language to show the data the state relied on is “largely speculative.” If New Jersey and Kentucky take the plunge, they would join the majority of states in curtailing how much sales tax is imposed on investment metals. While some states have done full repeals, others waive the tax when the purchase amount hits a certain threshold. In Florida, the sales tax on precious metals is eliminated when the transaction exceeds $500; tax doesn’t apply to smaller sums of US legal tender. A bill introduced in Vermont would get rid of the sales tax when the sale is valued at $1,000 or more.
