State lawmakers of both houses have just voted overwhelmingly to exempt physical gold, silver, platinum, and palladium coins and bullion from the Mississippi state sales tax, sending the bill to Governor Tate Reeves (R) for his signature.
Senate Bill 2019, sponsored by Sen. Chad McMahan (R – 6), passed yesterday out of the full senate by a vote of 47-2. This afternoon, Rep. Jody Steverson’s identical House Bill 1661 passed out of the full house chamber on an overwhelming voice vote.
Backed by the Sound Money Defense League, Money Metals Exchange, and in-state Mississippi dealers and investors, the legislative effort built upon last year’s momentum. In 2022, a similar sales tax exemption bill had passed out of the Mississippi House of Representatives overwhelmingly but it missed a deadline in the Senate needed to receive a hearing.
If Gov. Reeves signs the bill next week (or if he simply chooses not to veto it), Mississippi will become the 43rd state to exempt sales of sound money from state sales tax. The effective date is July 1, 2023.
Every one of Mississippi’s neighbors (Alabama, Louisiana, Kentucky, and Tennessee) have already stopped taxing the monetary metals. Most recently, Tennessee ended this tax in 2022, and Arkansas and Ohio eliminated this tax in 2021.
Under the status quo in Mississippi, citizens are discouraged from protecting their savings against the devaluation of the dollar because they are penalized with sales taxation for doing so.
Eliminating sales taxes on gold and silver is good public policy for several reasons:
- Levying sales taxes on precious metals is inappropriate. 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 application of sales taxes on precious metals inappropriate.
- Studies have shown that taxing precious metals is an inefficient form of revenue collection. The results of one study involving Michigan show that any sales tax proceeds a state collects on precious metals are likely surpassed by the state revenue lost from conventions, businesses, and economic activity that are driven out of the state.
- Taxing gold and silver harms in-state businesses. It’s a competitive marketplace, so buyers will take their business to neighboring states, such as Alabama or Louisiana (which have eliminated or reduced sales tax on precious metals), thereby undermining Mississippi 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 $136.50 in sales taxes, for example, on a $1,950 purchase of a one-ounce gold bar.
- Taxing precious metals is unfair to certain savers and investors. Gold and silver are held as forms of savings and investment. Mississippi does not tax the purchase of stocks, bonds, ETFs, currencies, and other financial instruments.
- Taxing precious metals is harmful to citizens attempting to protect their assets. Purchasers of precious metals aren’t 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, Mississippians on fixed incomes, wage earners, savers, and more.
The trend across the nation is to eliminate taxes on precious metals. The state of Louisiana and Ohio both experimented briefly with reimposing sales taxes on precious metals purchases. They both quickly reversed course (within two years) and reinstated their sales tax exemptions on precious metals — because businesses, coin conventions, and state tax revenues were leaving the state.
After the two identical Mississippi bills are transmitted from their respective chambers, Governor Tate Reeves must sign or veto the legislation within 5 days after transmittal (excluding Sunday), or it becomes law without his signature.
In 2023, bills to restore sound, constitutional money have also been introduced in Alaska, Iowa, West Virginia, South Carolina, Missouri, Minnesota, Tennessee, Montana, Idaho, Wyoming, Kansas, and more.
Currently Mississippi is tied for 45th out of 50 in the 2023 Sound Money Index. Passage of these measures would increase the state’s ranking dramatically.
**By JP Cortez