(Topeka, Kansas) – In the face of rising inflation nationwide, Kansas lawmakers have reintroduced two measures that would eliminate a big hurdle for residents who want to own and use gold and silver: capital gains taxes.
Representatives Mike Murphy (R-114) and Brett Faircloth (R-113) have reintroduced House Bill 2405 and Senate Bill 303. These measures would exclude from gross income any net capital gain derived from the exchange of precious metals bullion.
Kansas was smart to stop charging sales taxes on these metals a while back. Now, they're thinking about taking the next logical step by cutting out income taxes on transactions involving gold and silver. If the bill passes, Kansas would join other states that have already said no to income taxes on the only type of money mentioned in the U.S. Constitution.
In recent years, legislation to remove capital gains taxes currently assessed on the sale of the monetary metals progressed through several state legislatures – Wyoming and Arizona were the last two states to remove income taxes from constitutional money. Alabama, West Virginia, South Carolina, Missouri, Iowa, and others are currently considering similar legislation.
Here are a few reasons why slapping an income tax on the monetary metals is wrong, and why these bills are good public policy:
-Current Kansas 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 Kansas uses federal adjusted gross income (AGI) as a starting point for Kansas income calculations, this nominal gain is taxed again by the 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.
-HB 2405/SB 303 is the next logical step for Kansas to support sound money.
Investments in precious metals coins and bullion are rightly exempt from Kansas’s sales tax. Neutralizing Kansas’s income tax treatment of the monetary metals would remove the last major disincentive in the Sunflower State that stands against the ownership and use of the monetary metals.