(Lincoln, Nebraska) - In a powerful display of grassroots pressure, Nebraska politicians beat a hasty retreat this week after attempting a brazen tax grab that would have reimposed sales taxes on purchases of gold and silver in the Cornhusker State.
The Sound Money Defense League and Money Metals Exchange, alongside a coalition of concerned citizens, in-state dealers, and pro- sound money State Senator Ben Hansen, successfully thwarted this misguided effort, proving that Nebraskans will not stand for attacks on their financial freedoms—especially during a time of rampant inflation.
Legislative Bill 1 (LB 1) had sought to eliminate a longstanding sales tax exemption on precious metals and thereby align Nebraska with fringe pro-tax states like Vermont and Hawaii.
The overwhelming trend nationwide has been to eliminate this tax, with only five states still fully taxing gold and silver purchases.
If passed, these provisions within LB 1 would also have reversed the Nebraska’s recent progress in promoting sound money principles. That’s because Nebraska Governor Jim Pillen signed LB 1317 only four months ago, removing capital gains taxes on gold and silver.
Just as exchanging a dollar for four quarters is a non-taxable event, so too should the exchange of Federal Reserve Notes for the only forms of money explicitly mentioned in the U.S. Constitution—gold and silver—be free from taxation.
Purchases of precious metals are not being consumed -- they are held for resale as investments. Precious metals are held as protection against inflation, financial turmoil, and the devaluation of fiat currency.
Sen. Hansen said, “Nebraskans should not be taxed on purchases of constitutional money. This misguided effort to increase the tax base would harm residents of our state looking to protect their wealth with money that has preserved its value for thousands of years.”
The notion of sales taxes on these transactions is not only inappropriate but also discriminatory, as other financial instruments such as stocks, bonds, and real estate are not subject to this sort of tax.
Moreover, the abortive sales tax grab would have placed Nebraska businesses at a severe disadvantage. With every single neighboring state—South Dakota, Iowa, Missouri, Kansas, Colorado, and Wyoming—exempting gold and silver from sales taxes, many Nebraskans would have simply taken their business elsewhere, depriving the state of actual taxable economic activity and, ironically, the tax revenue the bill sought to generate.
Nebraska’s attempt to reimpose this tax mirrors past mistakes made by other states—mistakes they were quick to correct. In 2021, Ohio repealed its sales tax exemption on precious metals, only to face immediate backlash.
The Ohio repeal hurt in-state businesses, reduced tourism dollars, and harmed Ohio investors who sought to protect their wealth against inflation. Recognizing this damage, the Ohio legislature passed legislation to reinstate the exemption the following year.
Louisiana faced a similar situation in 2016 when it briefly imposed sales taxes on precious metals. The result was a rapid decline in business activity, with coin conventions and other events leaving the state, leading to a decrease in state revenue until Louisiana lawmakers quickly reversed course.
Alabama, Utah, Wisconsin, Nebraska, Louisiana, and Kentucky have already passed legislation in 2024 ending sales and capital gains taxes on precious metals, declaring that Central Bank Digital Currencies are not valid money in their state, reaffirming the metals as legal tender, or empowering state treasurers to invest state funds in gold and silver.
Img credit: WikiCommons/Boracasli
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.
