Mississippi looking to lead the fight to recognize gold and silver bullion as money
(Kitco News) - Gold and silver's path to regain their luster as sound money continues to move forward, with several states looking to approve legislation that would remove sales taxes on the precious metals.
According to a report from the Sound Money Defense League, out of eight states that still charge a sales tax on gold and silver, five: Mississippi, Maine, Kentucky, Wisconsin and New Jersey are considering bills to end this tax this year.
Mississippi, in particular, became the latest state to join the club as Sen. Melanie Sojourner introduced her proposed legislation Tuesday.
However, Mississippi's proposed law also goes a few steps further as it would also remove any gain or loss on the sale or exchange of gold and silver bullion that would be included in a taxpayer's federal adjusted gross income.
"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," said Jp Cortez, policy director for the Sound Money Defense League in the report.
"Neutralizing Mississippi's sales and income tax treatment of the monetary metals would remove two major disincentives in Mississippi that stand against the ownership and use of the monetary metals," Cortez added.
Sojourner's bill would also allow the state treasurer to invest at least 1% of the state's excess general and special funds to be invested in gold and silver. And finally, the bill also proposes an in-state bullion depository to store its gold and silver.
The league noted that Ohio is the only state currently known to hold physical gold as part of its state funds. In 2020 the Ohio Police and Fire Pension Fund approved a 5% allocation in gold, valued at $16 billion, to help diversify its portfolio and hedge against inflation.
"Most states have substantial exposure to debt paper (such as bonds), most of which have a substantially negative real rate of return as a result of inflation rates that are substantially higher than the nominal yield on the bonds," said Cortez in the report. "Current economic circumstances have sparked increased interest in many states to hold gold and silver as a form of financial insurance."
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Cortez noted that if Mississippi passes the proposed legislation would make it one of the top states recognizing gold and silver as important monetary assets.
While Mississippi appears to be leading the new charge in bullion markets, they are not alone. The Defense League noted that Arizona, Utah, and Wyoming have already enacted similar income tax exemptions into law.
At the same time, Wyoming, West Virginia, Tennessee and Missouri have introduced legislation to allow their respective treasurers to hold gold and silver in order to protect the state's assets.