(Columbia, South Carolina, USA – December 14, 2022) - South Carolina ended sales taxes on purchases of precious metals long ago, but now a pro-liberty candidate from Laurens wants to eliminate yet another tax on on gold and silver transactions.
Prefiled by Rep. Stewart Jones, House Bill 3081 would end capital gain transactions on the exchange of gold and silver.
Arizona, Utah, and Wyoming have enacted similar measures into law. Idaho has considered this measure recently and a similar measure is expected to be heard before the Oklahoma legislature this year.
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 South Carolina 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 South Carolina 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 South Carolina uses federal adjusted gross income (AGI) as a starting point for South Carolina income calculations, this nominal gain is taxed again by the Palmetto 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 South Carolina's sales tax. Neutralizing South Carolina's income tax treatment of the monetary metals would remove the last major disincentive in the state that stands against the ownership and use of the monetary metals.
Policies that penalize savers in precious metals reduce the likelihood that South Carolina citizens will take prudent steps to insulate themselves from the inflation and financial turmoil caused by the Federal Reserve.
South Carolina 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.
image credit: Enzwell