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Oklahoma repeals double taxation of monetary gold and silver
By John Stancavage
Tulsa World, Tulsa, Oklahoma
Sunday, June 22, 2014
http://www.tulsaworld.com/business/johnstancavage/good-as-gold-new-law-r...
Oklahoma has a new law that recognizes gold and silver as legal tender and eliminates the sales tax on buying the two metals.
The law came from Senate Bill 862. After reading that document, I still had trouble understanding what the advantages of the new law are for state residents, so I called two of the bill's authors, Rep. Gary Banz, R-Midwest City, and Sen. Nathan Dahm, R-Broken Arrow.
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"The new law does two things," Banz said. "First, it removes the sales tax on buying gold. Before you had to pay sales tax when you bought it and capital gains tax when you sold it. So that was double-taxation.
"And, second, it removes a stipulation about keeping gold in a registered depository in order to not have to pay taxes."
Utah enacted a similar law a couple of years ago, and about 12 other states are considering them.
Essentially, it appears the biggest benefit of the change for the average person is that it puts gold and silver on a level playing field with stocks and bonds as far as the cost involved in investing.
"More people are turning to gold and silver as a hedge against inflation," Banz said.
It also opens the door to using gold and silver in regular transactions, but it's hard to say if this idea will ever gain much traction.
No one, of course, would want to pay for groceries or other items directly with gold coins, since the value of the metal would exceed the face value of the currency.
However, other ways to pay with your gold could develop here.
Dahm said a Utah company has begun offering a service where a client's gold or silver is held in escrow. The person gets a plastic card, similar to a debit card, that allows him to pay for purchases directly from his precious metals account -- if the payee accepts such an arrangement.
"It would kind of be like using PayPal," an electronic payment system that draws funds from a user's bank or credit account,” Dahm said. "It's just another means of making a transaction."
Since gold and silver prices can fluctuate widely every day, using a third-party service could make sure the value of the gold or silver at the time of the payment is accurate.
Like credit and PayPal, there would be fees involved to tap your gold and silver holdings.
In addition to these uses, there also seems to be a fringe element that believes hoarding gold is a way to protect people from what they see as federal government actions that endanger the value of the dollar.
There's plenty of Internet chatter about this aspect, but most mainstream experts point out that the Federal Reserve has kept inflation under remarkable control for years and there's no credible evidence U.S. currency is facing any kind of crisis.
Dahm says the biggest advantage he sees to the new law is the removal of tax for investors.
The passage of the bill also might encourage more coin shows to be held in the state, he said. "Those events can draw a lot of people," he said.
Mike Anderson at Tulsa Gold & Silver, 6357 E. 41st St., said his company welcomes the new law.
"There are about 35 other states that don't tax the sale of precious metals," he said. "So adding that 8.5 percent put us at a disadvantage."
Anderson predicted the new law, which goes into effect Nov. 1, will increase interest in gold and silver.
The investment already has had enjoyed some periods of high demand in recent years, including 2013, when it was difficult to get gold coins such as South African Krugerrands, American Eagles, and Canadian Maple Leafs.
"Gold prices had fallen then," Anderson said. "So there were a lot of people buying. This year we've reached more of an equilibrium with buyers and sellers. So it's easier to get those coins."
On Friday, gold rose more than $2 an ounce to about $1,316 on tensions in the Middle East. Silver was up 30 cents to almost $21 an ounce.
Both metals, however, still have quite a ways to go to reach historic highs. Gold went over $1,900 in 2011, while silver spiked to $49 the same year.
Now with prices down and the sales tax to disappear here soon, more people may seek out the glittering metals.
"We're probably going to be busy," Anderson said.
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