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The state of Arkansas has recently signed legislation that removes sales taxes on gold, silver, platinum, and palladium bullion and coins. The move has been lauded as making it easier to use these coins as money in the state.
“Including Arkansas, 40 U.S. states now fully or partially exempt gold and silver from the sales taxes. That leaves ten states and the District of Columbia as the primary jurisdictions that still harshly penalize citizens seeking to protect their savings against the serial devaluation of the Federal Reserve Note,” said Jp Cortez, policy director for the Sound Money Defense League.
However, George Milling-Stanley, chief gold strategist at State Street Global Advisors, told David Lin, anchor for Kitco News, that the move in Arkansas or any other state signifies a major difference in terms of getting people to use gold and silver coins as legal tender.
“I don’t think we are ever going to see precious metals bullion coins come back as legal tender based on their actual value, as opposed to their face value,” he said. “The federal government ruled, when it launched the American Eagle coin back in 1987, that these coins were legal tender but only for their face value which is way, way, way below the value of the gold contained in these coins.”
Attempts have been made in the past to reduce sales taxes on precious metals and make them legal tender, but it is simply impractical to use them given the huge discrepancy between face value and fair value of the coins, Milling-Stanley said.
On the likelihood that gold will breach new all-time highs this year, Milling-Stanley said that “I think it’s possible, I’m not sure I’d go as far as probable.”
For more on Milling-Stanley’s macroeconomic outlook and drivers for the gold price this year, watch the video above.
By David Lin
For Kitco News
