(Juneau, Alaska) - Last year, a pro- sound money measure that eliminates local sales taxes on purchases of precious metals and affirms gold and silver as legal tender passed out of the Alaska State House with a favorable vote. This bill has been introduced, and Alaska's Senate will consider the measure next.
Rep. Kevin McCabe has reintroduced House Bill 3, a reintroduction of last year’s effort to eliminate sales taxes in other boroughs and localities. The measure now has 21 cosponsors and is awaiting a hearing before the Senate State Affairs committee.
The measure would also reaffirm gold and silver as legal tender and calls for a House Finance Committee study on the possibility of establishing additional forms of legal tender for the payment of debts, including public charges, taxes, and other money owed to the state.
Last year, executive director for the Sound Money Defense League Jp Cortez traveled to Juneau to testify in support of the measure.
Under current law, Alaska does not have a state sales tax. However, citizens are still discouraged from insuring their savings against the devaluation of the dollar because they are subject to taxation from cities and boroughs for doing so. House Bill 3 exempts gold and silver from sales taxes from state, city, and local taxes.
Here are a few reasons why taxing the purchase of precious metals is wrong:
- 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 Alaska 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 Alaskan businesses (and reduce Alaska state revenues).
- There is a national trend to remove sales taxation from precious metals, with 43 states already having done so in whole or in part.
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.
More than a dozen states have introduced pro-sound money legislation in 2024 so far, including Indiana, Iowa, Georgia, Kansas, Kentucky, Missouri, New Hampshire, New Jersey, Oklahoma, Vermont, West Virginia, and Wisconsin.