Sound money advocates are today (September 12, 2024) hailing their hard-fought victory today as New Jersey’s Senate Bill 721 was signed into law—thereby removing sales taxes on purchases of gold, silver, and other precious metals above $1,000 effective January 1, 2025.
The long-anticipated bill signing by Gov. Phil Murphy positions New Jersey, alongside 44 other states, that recognize the importance of exempting constitutional sound money from burdensome taxation. Supported by the Sound Money Defense League, Money Metals Exchange, and in-state activists, Senate Bill 721 enjoyed unanimous support from both sides of the political aisle, including 13 Democrat and Republican formal sponsors.
“In 2024, New Jersey was one of seven states to have passed legislation that removes taxes on precious metals, reaffirms gold and silver as constitutional money, empowers state treasurers to invest in physical gold, and more,” reported Stefan Gleason, president of Money Metals and Chairman of the League.
“Our work isn’t done,” said Gleason. “With New Jersey reversing its policy, New Mexico, Maine, Vermont, Hawaii, and Kentucky are the only states that still charge sales tax on the metals. Those are our biggest targets moving forward.”
Eliminating sales taxes on the monetary metals is good public policy for many 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 proceeds from a sales tax that 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, thereby undermining in-state jobs. Investors can easily avoid paying $169 in sales taxes, for example, on a $2,550 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. New Jersey already 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, New Jerseyans on fixed incomes, wage earners, savers, and more.
Executive director of the Sound Money Defense League, Jp Cortez, traveled to Trenton to testify in support of exemption before numerous Assembly and Senate committees. He said,
The recent passage of S721 in New Jersey highlights the wave of support we are seeing in the states for sound money legislation.
This victory is a direct result of grassroots pressure from in-state advocates, persistent messaging and communication, and the growing awareness that taxing constitutional money is a backwards policy.
There is a fly in the ointment, however. S721 ultimately included a “poor tax” provision that discriminates against small-time savers of precious metals who purchase below $1,000 at a time. New Jersey is one of only seven states (CA, CT, FL, MD, MA, NY) that includes this regressive tax scheme while exempting all larger purchases of gold and silver coins, bars, and rounds. Its score is expected to rise sharply on the Sound Money Index, where it had languished in 49th place.
