Saturday, July 20, 2024

N.J. Legislature Again Votes Unanimously to End Taxes on Gold, Silver

(Jp Cortez, Sound Money Defense League) For the second time in less than a year, the New Jersey legislature has voted to end the sales tax on purchases of gold and silver coins, bars, and rounds without a single dissenting vote.

A2812 and S721, carried by Sens. Steinhardt and Sarlo and Asms. Greenwald, Swain, and Egan enjoyed overwhelming support, passing the Senate by a vote of 40-0 and the Assembly with a 71-0 vote.

Last year’s bills, A5294 and S1825, had passed out of both committees and both chambers of the New Jersey legislature without a single “no” vote. This popular bill had more than a dozen cosponsors and had unanimous approval in each legislative chamber. Despite this, Gov. Murphy chose not to enact the bill into law.

Kentucky, Wisconsin, Alabama, Tennessee, Virginia, Mississippi, and Ohio have all recently enacted legislation to exempt gold and silver from state sales tax, or extend their existing exemption on the metals. In total, 45 states have ended sales tax on gold and silver – including all three of New Jersey’s neighboring states.

Discriminatory tax policies that discourage precious metals ownership reduce the likelihood that citizens will take steps to insulate themselves from the inflation and financial turmoil that flows from the Federal Reserve System. 

Because of dramatically rising federal debt along with the excessive issuance of Federal Reserve note dollars (or their electronic equivalent), savers have been losing significant purchasing power as inflation across America.

However, holding some savings in gold and silver – the only money actually mentioned in the United States Constitution – is one way to protect one’s purchasing power. 

Ending the sales tax on precious metals purchases is good policy for several reasons:

  • Levying sales taxes on precious metals makes no sense because they are 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 goods. 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 New Jersey’s neighbors (Delaware, New York, Pennsylvania) have already stopped taxing gold and silver. Kentucky and Wisconsin ended this tax this year, and Mississippi ended this practice in 2023. Tennessee ended their version of this tax in 2022, and Arkansas eliminated theirs in 2021.

  • Taxing gold and silver harms in-state businesses. It’s a competitive marketplace, so buyers will take their business to neighboring states (which have all eliminated or reduced sales tax on precious metals), thereby undermining New Jersey 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 $159 in sales taxes, for example, on a $2,400 purchase of a one-ounce gold bar. 

  • 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.” Exchange one form of U.S. money for another should not be taxed.
  • Other types of savings or investments do not carry a sales tax. Gold and silver are held as forms of savings and investment. New Jersey does not assess a sales tax on the purchase of stocks, bonds, ETFs, real estate, currencies, and other financial instruments.
  • Taxing precious metals is harmful to small-time 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, New Jerseyans on fixed incomes, wage earners, savers, and more. 

New Jersey could become the 7th state in the country to pass pro sound money legislation in 2024. More than 25 states have introduced legislation this year to end taxes on gold and silver, bolster state taxpayer funds with the metals, and more in 2024, including Alaska, Indiana, Iowa, Georgia, Kansas, Kentucky, Michigan, New Hampshire, New Jersey, Oklahoma, Vermont, West Virginia, and Wisconsin.

Jp Cortez is a graduate of Auburn University and a resident of Charlotte, North Carolina. He is the Executive Director of the Sound Money Defense League, an organization working to remonetize gold and silver through nationwide legislative efforts. Follow him on X (Twitter) @JpCortez27.

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