Representatives in Vermont realize that their state has become a big outlier, and that it’s high time for the state to end their practice of taxing purchases of gold and silver.
House Bill 295, a measure that removes this taxation from gold and silver coins and bullion and thereby allows Vermont to align with the balance of U.S. states, including all of Vermont’s neighbors who currently enjoy a competitive advantage, was carried over from the 2023 session. Reps. Peterson, Clifford, Demar, Higley, and Smith carry this bill on the heels of the New Jersey legislature voting to end the sales tax on precious metals in their state without a single "no" vote.
Due to dramatically rising federal debt along with the excessive issuance of Federal Reserve note dollars (or their electronic equivalent), Vermont savers have been losing significant purchasing power as inflation rages across America.
Acquiring gold and silver as savings is one way citizens are able to protect themselves from this inflation.
There are strong public policy reasons why so few states still impose a sales tax on precious metals purchases…and why House Bill 295 is good policy:
- Other types of savings or investment do not carry a sales tax. Gold and silver are held as forms of savings and investment. Vermont does not assess a sales tax on the purchase of stocks, bonds, ETFs, real estate, currencies, and other financial instruments.
- Levying sales taxes on precious metals makes no sense because they held for resale. 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 imposition of sales taxes on precious metals illogical from the start.
- Studies have shown that taxing precious metals is an inefficient form of revenue collection. The results of a Michigan study, for example, demonstrated that any sales tax proceeds a state collects on precious metals may be 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 Vermont’s neighbors (Massachusetts, New Hampshire, New York) have already stopped taxing gold and silver.
- Taxing gold and silver harms in-state businesses. It’s a competitive marketplace, so buyers will take their business to neighboring states (which have all eliminated or reduced sales tax on precious metals), thereby undermining Vermont jobs. Levying sales tax on precious metals harms in-state businesses who will lose business to out-of-state precious metals dealers. Investors can easily avoid paying more than $100 in sales taxes, for example, on a $2,000 purchase of a one-ounce gold bar.
- Gold and silver are the only money mentioned in the U.S. Constitution. Article 1, Section 10 states that “no state shall make any Thing but Gold and Silver a tender in payment of debts.” It’s illogical to tax the exchange of one form of U.S. money for another.
- Taxing precious metals is harmful to smalltime savers. Purchasers of precious metals aren't usually 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, Vermonters on fixed incomes, wage earners, savers, and more.
The national backlash against inflation caused by federal spending, debt, and money printing is growing. State legislators this year have already introduced an unprecedented number of bills to remove government impediments to buying, saving, and using gold and silver.
The Green Mountain State is currently ranked 50th, dead last, in the 2024 Sound Money Index. By passing HB 295, Vermont can vastly improve its Sound Money Index ranking, as well as become the 44th state to end sales taxes on precious metals.
More than a dozen states have introduced pro-sound money legislation in 2024 so far, including Alaska, Indiana, Iowa, Georgia, Kansas, Kentucky, Missouri, New Hampshire, New Jersey, Oklahoma, Vermont, West Virginia, and Wisconsin.