Investors Want Sales Tax Exemption For Precious Metals
State Sen. John Schickel, R-Union, pre-filed a bill for the next session to exempt bullion and legal tender coins from Kentucky’s 6 percent sales tax. Investors in bullion and legal tender precious metal coins must, in the state, pay a sales tax upfront and a capital gains tax when they sell, representing a war on this clique of investors. Proponents of the bill argue that the state should treat investment options in precious metals like stocks and bonds, where sales taxes don’t apply, just like 33 other states. The move would take off the basic barricade of taxes placed on precious metals. The real question: Do we help the state first or the citizenry? According to the original intentions of the political american system, the interests of the citizenry herein win-out (in the form of the ability of lessening their tax burden) over the state.
The economic depression, to be sure, will not warm regulators up to the idea of passing tax exemptions. That is, after all, essentially what the fiscal cliff is all about. The bill proposed in Kentucky would only exempt money constituted of precious metals minted by the United States or foreign governments, and so thus not jewelry or numismatics and perhaps semi-numismatics.
“It seemed to me to be discouraging investment in precious metals,” Schickel said. “For people making investments of these kinds, we want Kentucky to be a friendly place to live.”
And Shickel is exactly right in thinking that is what these taxes do. They certainly are geared towards keeping “fencesitters” on the paper side of the fence. Boone County Clerk Kenny Brown brought the issue to Shickel’s attention:
“For the individual investor, I believe it is unfair,” Brown said. “If I buy $1,000 worth of P&G stock, I don’t get taxed on sales. It is an unfair tax on investment. If you are looking to preserve value, gold and silver are good investments. People are looking for things not as volatile.”
Coin dealers argue that the sales taxes affect sales, driving investors to internet retailers who generally do not charge taxes.
In the meantime, precious metals investors in Kentucky can travel to Illinois and Missouri to escape the sales tax.
“I think it levels the playing field for the small investor that can’t deal with the large brokerage houses out of state,” Karoleff said. “Instead of ordering off of eBay, they are able to see the product in the store and talk to somebody about the product. Most of the major states are tax exempt: Florida, Texas, New York, Pennsylvania.”
But, of course, flagbearers of the state will not back down from taxes where they can get them. Indeed, most states are more inclined to increase taxes on “citizens” than decrease.
“In the current economic condition, it will be extremely challenging to create any more tax breaks,” said state Rep Farmer. “Now, 10 years down the line, if the economy is booming like it was, Kentucky might look at more exemptions.”