Kentucky Eliminates Gold and Silver Tax Despite Governor Resistance

 

Kentucky Eliminates Gold and Silver Tax | Breaking News and Analysis

(Kentucky, April 16 2024) This week, Kentucky became the 45th state to pass sales tax exemptions for precious metals – but not without controversy. The exemptions are part of a much larger bill meant to clarify and expand the state’s tax laws. Kentucky Governor Andy Beshear exercised a line-item veto to eliminate the section of the bill regarding precious metals. Kentucky’s legislature ignored the veto, signing House Bill 8 into law and officially eliminating sales taxes for certain precious metal products. To ignore the veto, lawmakers cited the Kentucky constitution, which stipulates that governors are only able to exercise line-item vetoes on spending bills. Despite the quiet threat of a legal battle between the Republican-dominated legislature and the Office of the Governor, bullion stackers won’t pay state sales taxes in Kentucky starting in August. 

Legislators recently passed House Bill 8, which provides a blanket sales tax exemption for bullion products and currency. Under the new Kentucky law, tax-exempt gold, silver, platinum, and palladium products must be valued based primarily on their precious metal content. Additionally tax-exempt bullion products must be used, or have been used, as a medium of exchange within a state, national, or foreign government. House Bill 8 excludes precious metal items used in jewelry from its new sales tax exemption. 

Currencies are also tax-exempt under the new law, so long as they are valued as collectibles instead of as mediums of exchange. Currencies or coins incorporate into jewelry are still taxable in Kentucky. 

The text of Kentucky’s bullion sales tax exemption was originally a standalone bill. This initial draft failed, but legislators instead incorporated the provision into a much larger existing bill concerning Kentucky tax law. Governor Andy Beshear is a vocal opponent of bullion sales tax reform. Beshear justified his line-item veto of House Bill 8’s precious metal sales tax exemption: 

I am vetoing this part because if you own gold, you can afford to pay sales tax. Tangible goods are the primary basis of the sales tax. Other collectible goods are taxed as tangible personal property. 

This veto didn’t hold for long. The Lexington Herald reports that 85% of the democrat governor’s vetoes have been overridden by Kentucky’s Republican legislature. Lawmakers had no trouble stamping out Beshear’s resistance to House Bill 8. Citing the Kentucky Constitution, legislators deemed the veto illegal on the grounds that it didn’t involve a spending bill. A legal challenge from the Office of the Governor is all but guaranteed. Beshear lost a state Supreme Court case against the Kentucky legislature in early 2023. He reiterated legal threats against the Republican supermajority in March, prompting a response from the Republican Party of Kentucky: 

[Governor Beshear] can’t move or stop legislation; he must sue to get his way. 

Despite the likelihood of a legal battle in the next few months, Kentuck’s sales tax exemption for precious metals is on track to become law. Legislators directed Kentucky’s Secretary of State to begin the process of implementing the state’s new sales tax exemptions. 

With this move, Kentucky joins the list of 45 states that now offer exemptions for precious metal purchases. Wisconsin lawmakers passed a similar law last month after intense pressure from lobbyists and grassroot advocacy groups. Public support for precious metal sales tax exemptions is high. Research from the Michigan legislator found that tax exemptions for precious metals may significantly boost state revenue. It is clear that precious metal tax exemptions improve the investment climate – especially as investors turn to safe haven assets to shield their assets against economic uncertainty. 

Georgia, Kentucky, Wisconsin, and Kansas have introduced bills that would exempt precious metals from state sales and income taxes, fostering a more favorable investment climate.https://t.co/p5xmMBHgAr

— OilPrice.com (@OilandEnergy) February 3, 2024

Barring legal action to reinstate the Kentucky Governor’s veto, House Bill 8’s bullion sales tax exemptions will go into effect on August 1. 

Need some more info? Click the image above for a closer look at Kentucky’s newest bullion sales tax law.