Let's Talk About Sales Tax - An Economic Conversation
This is NOT a political conversation, so, let's keep politics out of it please, even if the solution involves dealing with or getting through to politicians.
I live in a large East Coast State where Sales Tax is charged on Bullion unless the sale is over $1,000.
This means that unless I want to pay over 8.5% of Sales Tax above Spot, I need to buy at least $1,000 of bullion in each purchase.
To my mind, the states that have these "Sales Tax on Bullion" laws seem to be acting in a penny smart and pound foolish way.
I think laws like this deter business in the state because of the purchase habits of people who buy silver and fractional gold.
This law creates a situation where a Local Coin Shop (LCS) will only sell to those who are interested in spending $1,000 or more on one purchase, and that is not the majority of collectors! I can't imagine that LCS in this state haven't been hurting or simply closing. I know that I haven't walked into any for precisely this reason.
So the State just lost Income Tax Revenue and all the sales tax revenue that comes from Economic Activity in the State in exchange for - what exactly? How much Sales Tax are they now collecting on Bullion already? I would imagine it's a miniscule amount!
I sincerely do not think these States understand Silver Bullion Stackers or Collectors.
I can never walk into a LCS and say "Hey, what do you have?" because unless my entire purchase is over $1,000 I am paying 8.5% or more on my purchase. And I'm not doing it! And neither is anyone else who isn't extraordinarily wealthy. Most people are not making impulse buys of $1,000 or more.
On top of that, I will not place any orders to online bullion dealers until what I am ready to buy has a value of $1,000 or more of bullion. Again, because I'm not, and most bullion stackers or collectors I would imagine are not, willing to spend an extra 8.5% more on their bullion.
Not only that, I am certain that there are lots of people in my state engaging in Sales Tax Evasion. Because a silverbug's only purchases of bullion for under $1,000 will be on informal "Marketplaces" like Facebook or here on Reddit.. And those who buy on these marketplaces will certainly NOT be paying state Sales Tax on those purchases!
But more importantly, every purchase that I and others in my state put off for waiting until my entire purchase is over $1,000 causes the State to lose money. Because that's one less delivery, meaning one less truck driver on the road, one less sandwich he's buying for lunch, and a lot less economic activity in my State as it all adds up.
I have a feeling that the actuaries who crunched the numbers for the state policy makers were NOT taking into account the buying habits of bullion stackers or collectors because how could they possibly know them?!
I also have a feeling that the States that instituted Sales Tax on bullion in their states, whether it be for under $1,000, or whatever other conditions they placed, were simply jumping on the idea of "Let's Get More Tax Revenue!" with no consideration of how the laws would actually shape the habits of buyers and effect LESS tax revenue due to LESS economic activity at the end of the day.
I also wonder who advised states to use these seemingly arbitrary minimum sales numbers like a $1,000 purchase, or a $2,000 purchase, or other such measures?
Can any Economist Wonks out there chime in and tell me if I'm missing something?
The reason I'm asking is because I would like to start petitioning not only my state, but ALL states that charge Sales Tax on silver bullion.
I want them to understand how Silverbugs work and how much they are losing out on and how they are essentially being penny wise and pound foolish with these laws.
P.S. I understand that since South Dakota v. Wayfair in 2018 states have been salivating over how much sales tax they can collect. And I realize that due to so much of that happening fairly recently, it makes the policy makers believe they can get even more for the states with these "Sales Tax on Bullion" laws. But some laws are really backwards and cause the opposite what they intend. I think this is one of those cases.