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Many States Are Working To End Sales Tax On Precious Metals

tax on sale of precious metals
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EDITOR'S NOTE: Mississippi may be the next state to eliminate taxes on the sale of “sound money.” Although this legislation wouldn’t place gold and silver in the same category as “legal tender,” it recognizes the absurdity of taxing the conversion of money from one form to another. It also recognizes the metals’ monetary function, namely to preserve capital and wealth. Mississippi is actually one of nine remaining states that still impose sales tax on gold and silver bars and coins. It may take a while before gold and silver may be reinstituted as sovereign currency, assuming this happens at all. But House Bill 426, calling to abolish tax on the sale of precious metals, makes for a promising start. At a time when runaway inflation is eroding the dollar’s purchasing power with accelerating force, perhaps the government might consider weighing the risks of maintaining a fiat system against the revenue benefits of hidden taxation.

The Mississippi Legislature could be close to putting an end to the state’s sales tax being applied to coins, currency and bullion. 

House Bill 426 is authored by state Rep. Jill Ford, R-Madison and would end the levying of the state’s 7 percent sales tax on the sale of bullion and coins and currency not used as a medium of exchange but bought as collectibles. 

The Senate Appropriations Committee will take up the bill after the House passed it by an overwhelming 121-1 vote on February 17. The next deadline on the appropriations/revenue timetable is March 15 for bills to be voted on by the other house. 

Mississippi is one of nine remaining states — Hawaii, Maine, New Jersey, New Mexico, Tennessee, Kentucky, Wisconsin and Vermont — that still impose sales taxes on the sale of precious metals.

Ohio was the latest state to remove its tax on precious metals after Gov. Mike DeWine signed into law House Bill 110 in July.  

Arkansas has also eliminated the tax on precious metals as well after Gov. Asa Hutchinson signed into law Senate Bill 336 in May. 

Speaking of the Volunteer State, the Tennessee General Assembly’s Fiscal Review Committee did an estimate of how much such a tax reduction would affect Tennessee’s revenues. They calculated that Tennessee would lose $360,000 in sales tax revenue annually, while local governments would lose out on a total of $117,000 per year. That’s a drop in the bucket compared to the more than $847 million in sales and use tax revenue (Tennessee has a 7 percent sales tax rate) the state collected in July.  

With Tennessee having a gross domestic product of $421 billion in 2021 and Mississippi with a GDP of $126 billion, the loss in sales tax revenue for Mississippi would add up to about $107,000 annually for state coffers and $35,256 for municipalities (counties in Mississippi don’t receive sales tax revenue). 

The Sound Money Defense League is an advocacy group that supports the reinstitution of gold and silver as the nation’s currency. The group says that eliminating the sales tax on precious metals would allow Mississippians to insure their savings against the devaluation of the dollar because the tax provides a disincentive for them to hold metals for this purpose. It also says levying a sales tax on precious metals is inappropriate since they’re being held for resale or exchange, not consumption. 

There is legislation at the federal level that could help do the same for precious metals. U.S. Rep. Alex Mooney, R-West Virginia, has introduced the Monetary Metals Tax Neutrality Act of 2021, which would exempt gains or losses from the sale or exchange of certain coins or bullion from recognition for income tax purposes.  

Originally posted on Northside Sun.

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