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Tax on bullion investments unfair

It is one week until the filing deadline for state and federal income tax arrives.

This is the time of the year that individuals who decided last year to sell some coins or bullion items for the first time realize that they have to pay a 28 percent tax on their long-term gains as opposed to 15 percent for stocks.
Is this fair?

No.

Will it likely change?

Certainly not soon.

This discrimination between investments has been occurring since 1981. It was adopted by Congress the last time precious metals were beating traditional Wall Street investments.

Pointing this out last week at Rep. Ron Paul’s hearing on the Mint’s bullion coin programs was Terence Hanlon, president of Dillon Gage Metals.

He said ending this tax discrimination would boost the market potential for American bullion coins.

He’s right.

He even forecast a 30-50 percent increase in demand for U.S. bullion coins if the playing field were evened out.

However, the follow-up question by a member of the subcommittee was a logical one.

How would the Mint keep up with the new demand when it has been having difficulty keeping up with the present demand?

Hanlon’s response was not satisfying when he said that demand would move over into other metals and exchange traded funds.

That may be true, but the numismatic hobby/industry needs to come up with a simpler answer that is easily understood and would resonate with everyone.
It may be unfair to tax these assets differently, but since it has been going on for 30 years, we need a snappier response.

Kudos to Hanlon for raising the issue.

The rest of us need to put our thinking caps on to reinforce his position.

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3 Responses to Tax on bullion investments unfair

  1. Mark says:

    The tax code favors stocks and real estate. They are about the only things (except for bonds which I lump with stocks) that get the favorable 15% long-term capital gains rate. Everything else is considered a "collectable" and taxed at the higher 28% rate. It shows the real estate market and the stock market have good expensive lawyers that lobby their cause.

  2. Tom Snyder says:

    I have seen that a lot of bullion trading is being done on a cash basis, so on some of this trading the governments haul is zero. How does that saying go. For every action there is an equalizing reaction. Congress gets a zero in physics.

  3. joe says:

    This is just one example of "unfair" congressional logic among a myriad of examples. Unless you are paying the politicians as a lobbyist, then you get bubkiss. Obamacare is another example of foisting something on everyone and then exempting the democrat lobbyists/constituency. Stay tuned…more will be yet to come in the upcoming president speech on "overhauling" the tax code.

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