(Jackson, Mississippi) – A lawmaker in Mississippi introduced legislation yesterday that would prompt the state to invest a small portion of state funds in gold and silver, as well as eliminate sales and income tax liabilities on the monetary metals.
Mississippi is one of only eight states that still participate in the increasingly controversial and outmoded practice of charging sales taxes on precious metals, i.e. constitutional sound money. A separate bill pending in the Mississippi legislature right now would end the sales tax specifically.
Of the eight states that still charge sales tax on gold and silver, five (Mississippi, Maine, Kentucky, Wisconsin, and New Jersey) are considering bills to end this tax in 2023.
But Senate Bill 2966, introduced by Sen. Melanie Sojourner, goes further by 1) exempting purchases of gold and silver from sales taxes, 2) removing any gain or loss on the sale or exchange of gold and silver bullion that is otherwise included in a taxpayer’s federal adjusted gross income, 3) prompting the state treasurer to invest no less than 1% of the excess general and special funds of the state in gold or silver, and 4) establishing an in-state bullion depository to store any gold or silver that may be transferred to or otherwise acquired by the state.
Mississippi is among more than a dozen states overall that are considering sound money legislation this session, underscoring the growing national backlash to today’s runaway inflation problem caused by excessive federal debt and central bank money printing.
Arizona, Utah, and Wyoming have already enacted similar income tax exemptions into law.
Removing both sales and income taxation from gold and silver is a good policy for several reasons:
- Taxing precious metals is unfair to certain savers and investors. Gold and silver are held as forms of savings and investment. Mississippi does not tax the purchase of stocks, bonds, ETFs, currencies, and other financial instruments.
- Levying sales taxes on precious metals is inappropriate. Sales taxes are typically levied on final consumer goods. Computers, shirts, and shoes carry sales taxes because the consumer is "consuming" the good. Precious metals are inherently held for resale, not "consumption," making the application of sales taxes on precious metals inappropriate.
- Current Mississippi law assesses taxes on imaginary gains. Under current law, a taxpayer who sells precious metals may end up with a capital “gain” in terms of Federal Reserve Notes. This capital “gain” is not necessarily a real gain, it’s often a nominal gain that results from the inflation created by the Federal Reserve and the attendant decline in the dollar’s purchasing power.
Yet this nominal gain is taxed at the federal level – and, because Mississippi uses federal adjusted gross income (AGI) as a starting point for Mississippi income calculations, this nominal gain is taxed again by the Magnolia State.
- Inflation harms the poorest among us. Inflation is a regressive tax. The hardest hit are wage earners, savers, and pensioners on fixed incomes – as well as those who own few or no tangible assets.
- Taxing purchases and imaginary gains of precious metals are harmful to citizens attempting to protect their assets. Neutralizing Mississippi’s sales and income tax treatment of the monetary metals would remove two major disincentives in Mississippi that stand against the ownership and use of the monetary metals.
Meanwhile, Ohio is the only state currently known to hold physical gold as part of its state funds, even though the inclusion of precious metals in a financial portfolio has been shown to increase real returns while also reducing volatility.
Most states have substantial exposure to debt paper (such as bonds), most of which have a substantially negative real rate of return as a result of inflation rates that are substantially higher than the nominal yield on the bonds.
Current economic circumstances have sparked increased interest in many states to hold gold and silver as a form of financial insurance. Other bills to facilitate gold and silver holdings have also been introduced this year in Tennessee, West Virginia, and Wyoming… with another bill expected soon in Idaho.
Mississippi is currently tied for 45th on the 2023 Sound Money Index. If SB 2966 becomes law, Mississippi would rival Wyoming, the state currently at the top of the index with a score of 56 out of 100.
More than a dozen states have introduced pro-sound money legislation in 2023 so far, including Alaska, Minnesota, Mississippi, Oklahoma, Tennessee, Oregon, West Virginia, Wisconsin, Kentucky, Florida, and more.
Image credit: Relevation Animations/WikiCommons
About the Author:
Jp Cortez is a graduate of Auburn University and a resident of Charlotte, North Carolina. He is the Policy Director of the Sound Money Defense League, an organization working to bring back gold and silver as America's constitutional money. Follow him on Twitter @JpCortez27