(Charleston, WV, USA - January 13, 2022) - In 2019, the Sound Money Defense League teamed up with lawmakers and in-state supporters to eliminate the sales tax on the sale of precious metals in West Virginia. This year, a pro-sound money legislator hopes to take it a step further and remove yet another tax from the monetary metals.
Introduced by Del. Chris Pritt (36-R), House Bill 3135 creates a nonrefundable tax credit for capital gain transactions on the exchange of gold and silver for another coin or form of legal tender, as well as declaring gold and silver legal tender in West Virginia.
Arizona, Utah, and Wyoming have enacted similar measures into law. Idaho has considered this measure recently and similar measures are currently being heard before the Alabama and South Carolina legislatures.
In recent decades, monetary gold and silver -- and dollars redeemable in gold and silver -- have been supplanted by the Federal Reserve Note as America’s currency. However, an increasing number of West Virginia citizens are realizing that holding gold and/or silver as a form of savings can help protect against the ongoing devaluation of the Federal Reserve Note.
Here are a few reasons why slapping an income tax on the monetary metals is wrong:
- Current West Virginia 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 West Virginia uses federal adjusted gross income (AGI) as a starting point for West Virginia income calculations, this nominal gain is taxed again by the Mountain 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 imaginary gains is harmful to citizens attempting to protect their assets. Investments in precious metals coins and bullion are rightly exempt from West Virginia’s sales tax. Neutralizing West Virginia’s income tax treatment of the monetary metals would remove the last major disincentive in West Virginia that stands against the ownership and use of the monetary metals.
Policies that penalize savers in precious metals reduce the likelihood that West Virginia citizens will take prudent steps to insulate themselves from the inflation and financial turmoil caused by the Federal Reserve.
West Virginia savers, wage earners, and all those who use gold and silver to insulate against the devastating effects of inflation should be able to protect themselves without getting punished by taxation.