It is no surprise that the reference to what could be a call to return to a gold standard made in the Republication Party’s national platform got most of the headlines.
However, there is another item in the platform that should be of even greater interest to active coin collectors.
As part of a reform of the federal tax structure, the party has endorsed a value added tax, which essentially is a national sales tax, especially when it comes to its application to numismatic sales.
If state sales taxes of 5 percent to 8 percent drive numismatic businesses across state lines because collectors and investors won’t pay them, what would be the result of a national sales tax?
To be sure, it cannot be avoided like state sales taxes, but there is more to it than that.
You know a national sales tax isn’t going to begin at some easily digestible figure, like 1 or 2 percent. In a time of annual federal deficits running over $1 trillion, that just won’t cut it, especially if it is intended to make up revenue lost from further income tax cuts.
For the sake of argument, what would a 10 percent sales tax mean to numismatics?
In Europe and Japan, where VAT taxes are ubiquitous, each round of hikes in the tax has resulted in hurry-up buying before it takes effect and then a sudden drop in commercial activity afterward.
How would collectors behave if their Mint purchases, as well as those from their friendly neighborhood coin dealer and their favorite online vendors were suddenly taxed at 10 percent?
We are just as human as European and Japanese consumers. The shock would slow sales. How drastic the slowdown and how long it would last are the questions.
I don’t worry about the survival of the U.S. Mint, but what would a large drop in sales at the average coin dealership mean?
If a VAT can slow entire national economies, think of the damage it would do to the many small businesses that are characteristic of numismatics.
Whatever the intent might be by VAT advocates, the outcome will be to wallop numismatics in a way that we might not recover from.
Buzz blogger Dave Harper is editor of the weekly newspaper “Numismatic News.”