(Juneau, Alaska, USA – January 9th, 2023) – A lawmaker in The Last Frontier aims to restore sound money in Alaska in 2023.
Rep. Kevin McCabe has introduced House Bill 3, a reintroduction of last year’s effort to eliminate sales taxes in other boroughs and localities.
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, policy 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 42 states already having done so in whole or in part. Mississippi, Maine, Minnesota, and Wisconsin are expected to consider measures to remove sales taxation from precious metals in 2023.
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.
Meanwhile, 42 states have removed some or all taxes from the purchase of gold and silver.
The Sound Money Defense League strongly supports this measure and is actively working with lawmakers in Alaska to ensure passage of House Bill 3.
South Carolina, Mississippi, Missouri, and Alabama are just a few of the other states fighting their own sound money battles in 2023.
Img credit: Wikimedia Commons
Jp Cortez is the Policy Director for the Sound Money Defense League, a non-partisan, national public policy group working to restore sound money at the state and federal level and publisher of the Sound Money Index.