(Nashville, TN, USA – January 14, 2022) -- After years of several stymied pro-sound money efforts, legislators in Tennessee are feeling confident that 2022 will be the year when citizens can protect their savings without being taxed for purchasing gold and silver.
House Bill 514 and Senate Bill 870, introduced in 2021 by Rep. Gant and Sen. Stevens respectively, are expected to be considered this session. Tennessee hopes to be the 43rd state in the country to allow people to preserve the purchasing power of their money without being hammered by the tax man.
Under current law, Tennessee citizens are discouraged from insuring their savings against the devaluation of the dollar because they are penalized with taxation for doing so. House Bill 514 removes the disincentives to holding gold and silver for this purpose. Here are a few reasons why we strongly urge you to vote YES on House Bill 514:
- Purchasers of precious metals are not “consuming” them, making a sales tax and/or use tax inappropriate in the first place. Precious metals purchasers are holding these metals for resale or exchange, like a currency or investment.
- Taxing gold and silver is a de facto investment penalty on Tennessee citizens (usually of humble means) who seek to hold some of their savings in real assets that are insulated from inflation and financial turmoil. It’s also discriminatory, because purchases of stocks, bonds, mutual funds, ETFs, real estate, and every other financial instrument are not subject to sales tax.
- The exchange of one dollar for four quarters is a nontaxable event. Exchanging dollars for the only form of money mentioned in the U.S. Constitution should not be taxed.
- Taxing the purchase of monetary metals would also undermine Tennessee businesses (and reduce Tennessee state revenues). Many Tennesseans will buy and/or store their precious metals in nearby Alabama, Georgia, Missouri, North Carolina, and Virginia, which do not charge sales tax on precious metals.
- There is a national trend to remove sales taxation from precious metals, with 42 states already having done so in whole or in part. Arkansas, Mississippi, Hawaii, and Maine are expected to consider measures to remove sales taxation from precious metals in the upcoming weeks.
- Studies have shown that states actually lose revenue when they tax the purchase of gold and silver. Washington and Nebraska considered repealing longstanding exemptions on precious metals in their states but legislators realized the major policy error this would entail and the measure didn’t make it out of committee in either state.
Louisiana and Ohio both briefly imposed a sales tax on precious metals recently – but the legislature quickly reversed course after one year when businesses, coin conventions, and state revenues left the state.
That’s why any revenue collected from precious metals sales taxes would almost certainly be surpassed by the tax revenue lost from coin conventions, businesses, and other economic activity leaving the state.
Meanwhile, 42 states have removed some or all taxes from the purchase of gold and silver. Tennessee currently stands against the vast majority of its peers and its neighbors.
The Sound Money Defense League strongly supports and is actively working with lawmakers in Tennessee to ensure passage of this important measure. Kentucky, Mississippi, Hawaii, and Alabama are just a few of the other states fighting their own sound money battles in 2022.