Augusta, Maine - (March 6th, 2023) – More than a dozen lawmakers in Maine have introduced legislation to end Maine’s controversial practice of levying sales tax on purchases of gold and silver.
Legislative Document 1051, primarily sponsored by Sen. Eric Brakey (R - Androscoggin), already enjoys wide support. Similar measures have been introduced in Maine over the last several years, but those measures failed to receive a positive vote.
Meanwhile, though, other states continue to move forward in passing such exemptions. This new Maine bill, LD 1051, would exempt gold and silver coins and bullion from sales taxes effective January 1, 2024.
Imposing taxes on the exchange of Federal Reserve notes for monetary metals (i.e. gold and silver) has become an unusual and outmoded practice in the United States... only 8 states still engage in it.
With 42 states now having eliminated sales taxes on purchases of gold and silver, the Pine Tree State could be the next state to do so – although similar sales tax exemption bills are under consideration right now in Mississippi, Kentucky, Wisconsin, and Vermont.
Passage of LD 1051 would remove a major disincentive to holding gold and silver -- a reform that has become especially pertinent at a time when inflation is ripping through the economy and wreaking havoc on family budgets.
Eliminating sales taxes on gold and silver is good public policy for several reasons:
- 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.
- Studies have shown that taxing precious metals is an inefficient form of revenue collection. The results of one study involving Michigan show that any sales tax proceeds a state collects on precious metals are likely 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 Maine’s only neighbor (New Hampshire) has already stopped taxing gold and silver. This harms in-state businesses. Most recently, Tennessee ended this tax in 2022, and Arkansas and Ohio eliminated this tax in 2021.
- Taxing precious metals is unfair to certain savers and investors. Gold and silver are held as forms of savings and investment. Maine does not tax the purchase of stocks, bonds, ETFs, currencies, and other financial instruments.
- Taxing precious metals is harmful to citizens attempting to protect their assets. Purchasers of precious metals aren't 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, Mainers on fixed incomes, wage earners, savers, and more.
This is the second pro-sound money bill introduced in Maine this legislative session. LD 734, also sponsored by Sen. Brakey, would empower the state treasurer to invest state funds in gold and silver to hedge inflation and debt default risks.
In 2023, more than three dozen bills promote sound, constitutional money have been introduced, including in Alaska, West Virginia, South Carolina, Missouri, Mississippi, Minnesota, Tennessee, Idaho, Wyoming, Wisconsin, and more.
Currently Maine is ranked 48th out of 50 in the 2023 Sound Money Index. Passage of LD 1051 would significantly improve Maine’s standing.
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