Senator Eric Brakey submitted testimony to “illustrate the necessity of this legislation.” He began with an analogy: “If a Category 5 hurricane was careening towards our coast, would it not be prudent to eliminate taxes on the sale of life rafts to empower Maine people to prepare for the potential disaster?”
Many states do provide a temporary sales tax exemption for disaster preparedness supplies in the form of a sales tax holiday or tax-free weekend. But Maine isn’t one of them, and LD 1051 isn’t trying to create a Maine tax-free period.
So why bring up hurricanes and life rafts to support a gold and silver exemption? Because an economic crisis is coming, according to Brakey, and exempting gold and silver and bullion from Maine sales tax would help the state “prepare for a potential tsunami of inflation.”
Gold and silver have been “preferred forms of money” for thousands of years, he explained. Their divisibility, durability, portability, and uniform quality make them “uniquely effective stores of value and mediums of exchange,” and their value has remained remarkably stable. “It is often said that in the Roman Empire, an ounce of gold could buy you a well-tailored toga,” he added as an aside. “Today in America, an ounce of gold can buy you a well-tailored suit.”
But how many people have an ounce of gold?
“For the common man or woman,” continued Brakey, “owning gold and silver coinage and bullion is one of the most accessible, proven, and safe methods for protecting savings from inflation.” Exempting gold and silver from sales tax would remove “a significant barrier that prevents Maine people from protecting their savings.” It would also “help alleviate pressure on the ongoing shortage of affordable housing.”
Perhaps. About 10.8% of Americans own gold, according to a 2020 survey by Gold IRA Guide. Most Americans own neither gold nor silver. Those that do may own shares of a gold or silver fund in addition to (or instead of) physical bars and coins; they’re easy to trade and less likely to be lost or stolen. Brakey could have argued that physical gold and silver shouldn’t be subject to Maine sales tax because gold and silver funds are exempt.
Instead, Brakey’s testimony moves from the collapse of the Roman Empire, to the creation of the gold standard in the United States, to President Nixon’s ending the dollar’s convertibility into gold, and beyond. Other supporters were similarly descriptive in their testimonials, one claiming that an ounce of gold today will buy about 350 loaves of bread, “exactly as much bread as it would have bought you in 400 B.C. under the reign of King Nebuchadnezzar.”
As Brakey and others observed, few states tax the sale and use of gold, silver, and bullion today. Over the past seven years, Alabama, Indiana, Minnesota and several other states opted to exempt some or all sales of gold, silver, and/or bullion, though Alabama’s exemption is slated to expire in 2028.
If the governor of Mississippi signs Senate Bill 2862, Mississippi will exempt sales of coins, currency, and bullion starting July 1, 2023.
While most of the people who submitted testimonies to the Joint Standing Committee on Taxation on March 28, 2023, support the proposed exemption, one doesn’t.
