Sales Tax on Gold and Silver in California
California allows bullion and numismatic coins purchased individually that exceed $1500 to be exempt from sales tax, while accessory items like tubes and holders remain subject to sales tax.
Individuals with financial prudence often keep reserves of gold and silver as protection from unexpected events or economic turmoil. Applying sales taxes to precious metals punishes those who follow an effective savings strategy, with tax imposed as part of any such savings plan penalizing those who pursue a prudent and diversified savings strategy.
Taxation
Precious metals have long been seen as a secure investment that protects against market fluctuations, but trading them can become expensive due to commissions, storage fees and taxes.
Many people buy precious metals on a small scale over many years as part of a balanced long-term savings plan, investing incremental amounts over several years as part of an overall balance plan. By taxing these types of investments, imposing sales tax discourages precious metal investors and forces them towards riskier forms of long-term saving, jeopardizing state economies in the process.
California remains one of the few states that charge sales tax on bullion purchases; however, legislators in Wisconsin and New Jersey are currently pushing bills to end this outdated practice. Furthermore, certain cities and counties add their own levy to state sales taxes; so buyers need to be mindful of any additional requirements in their area before purchasing bullion.
Exemptions
California does not charge sales tax on precious metal purchases of $1,500 or more when made at once, though local tax laws will determine whether sales tax applies.
Precious metal investments tend to be undertaken gradually as part of a strategic long-term savings plan, adding incremental amounts over time as part of an effective long-term savings strategy. Imposing sales taxes punishes citizens for using this financial approach and encourages riskier paper investments like stocks and bonds instead.
So much so, that most states no longer impose sales taxes on gold and silver – as evidenced by Mississippi’s rollback of such taxes after four years of work by Money Metals Exchange and Sound Money Defense League. We hope other states follow Mississippi’s example and abandon this outdated and unfair tax on hard money.
Online Sales Tax
California may not have a state bullion depository, but it stands out amongst states by not taxing gold and silver purchases – an enormous boon for precious metals investors and collectors across the nation as sales taxes discourage trading of precious metals and reduce economic activity from metal brokering businesses to coin conventions.
States that impose sales taxes on precious metals generally only assess it when these products are sold for a gain (or profit). While often times such gains serve to hedge against devaluation of Federal Reserve paper currency, they still count as income on which a capital gains tax must be assessed.
PMCEX has long complied with local laws in each of the states in which we do business, with our checkout process taking into account specific tax rates for every delivery address when calculating sales taxes for California orders. However, federal legislation such as the Marketplace Fairness Act could change this in future as this would require all online retailers to collect sales taxes in all states they ship goods from.
Storage
Gold and silver investments have long been seen as a reliable means of protecting oneself against market fluctuations and economic instability, however purchasing precious metals can become prohibitively costly when you factor in fees, commissions and taxes.
State bullion depository would allow investors to avoid sales tax while also keeping their gold secure and out of sight of big government. Unfortunately, however, in many states sound money legislation has been blocked due to strong opposition by big politicians.
Investors also have the option of storing precious metals at home, but should keep in mind this can be risky. Standard homeowner’s policies don’t always cover their full value when it comes to precious metals stored at home; plus theft or fire risks increase substantially when stored this way. If this option appeals to you, be sure to have an effective storage plan in place – perhaps by setting up a legal trust – or consider professional storage facilities instead.
Categorised in: Blog