Earlier last month, lawmakers in four states took significant steps toward reducing the tax burden on precious metals investments. In a move aimed at encouraging investments in gold, silver, platinum, palladium, and even copper bullion, legislative proposals in Kentucky and Wisconsin sought to remove state sales taxes. At the same time, Georgia and Kansas focused on eliminating state income taxes on these assets.
Kentucky is considering House Bill 101 and Senate Bill 105, which, if approved, would remove state sales taxes on a range of precious metals starting in August of this year. Similarly, Wisconsin has put forward Assembly Bill 29 and Senate Bill 33, targeting not just traditional precious metals but also extending the exemption to copper bullion purchases.
Supporters of these legislative efforts argue that it’s illogical to levy sales taxes on precious metals since, unlike consumer goods such as electronics or apparel, metals like gold and silver are purchased with the intention of resale, not consumption. This viewpoint is supported by the Sound Money Defense League, which emphasizes that sales taxes are generally applied to final consumer goods, and precious metals do not fit this category due to their nature as investment assets held for potential future gains.
In Georgia and Kansas, where sales taxes on bullion were previously eliminated, lawmakers are advancing the cause of sound money by proposing removing state capital gains taxes on these investments. This would leave only federal capital gains taxes applicable to profits from precious metals. Additionally, Kansas is considering legislation that not only exempts precious metals from certain taxes but also reaffirms their status as legal tender within the state, potentially enabling their use as currency in voluntary transactions.
Critics of taxing precious metals highlight the redundancy of such taxes, especially when considering the impact of inflation. They argue that inflation acts as a form of taxation, diminishing the value of cash holdings and affecting all consumers, regardless of their investment choices. Individuals earning nominal capital gains on precious metals could face double taxation through inflation and explicit tax liabilities.
By contemplating these legislative changes, Kansas, Kentucky, Georgia, and Wisconsin are joining a growing list of U.S. states that offer tax advantages for precious metal investors. Last month, Missouri and Oklahoma introduced bills to exempt precious metals from state income taxes, with Oklahoma and Florida also exploring establishing state bullion depositories to encourage sound monetary practices.
This wave of legislation reflects a broader concern over the Federal Reserve’s monetary policies, especially in light of recent high inflation rates. These policies underscore the critical role of stable money in the economy and the detrimental effects of inflationary spending and escalating public debt on everyday citizens. State-led initiatives to ease the financial burden of investing in precious metals are seen as protective measures, offering residents a hedge against the eroding value of money.
If these bills in Kansas, Kentucky, Georgia, and Wisconsin pass, they would mark a significant step toward securing a more financially stable future for residents, safeguarding their investments against inflation and potentially onerous taxation.
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