From the Apr. 28 Numismatic News E-Newsletter:
Should gold imports be taxed like products such as lumber?
Here are some answers sent from our e-newsletter readers to Editor Dave Harper.
To my mind gold should not be taxed as a commodity like lumber. Gold is and has always been a benchmark for paper currency.
Levy of an import duty amounts to devaluation of one’s own currency to the extent of import duty, the foolishness which India has been doing for the last six years. The then-government raised import duties from 5 percent to 10 percent in order to wean away the general public from gold investments to the paper assets.
What are the pros and cons?
That said, it is a commodity, so imported gold being taxed seems correct.
On the other hand, it would give the U.S. Mint [U.S. gold] a monopoly in the U.S. market.
I believe that any company who produces their products in other countries in order to save money should have to pay a higher import tax, so if companies are sending their gold out to other countries to save money, then yes, they should pay a tax on it. But this tax should not be pushed down to the customers.
Bob D. Allen
Yes it is just like any other commodity.
The question is about taxing imported gold. The previous administration greatly increased the cost of exploration, mining and refining gold and other metals in the U.S. The effect is to decrease overall economic activity and deny Americans good-paying jobs.
Over recent years I have been studying gold and other precious metals. The richest and most fabulous deposits of gold were found and depleted long ago. About 2,700 years ago the Greeks of Athens discovered thick veins of silver and gold metal outcropping from a hillside at Laurium. The remains of the mining are still there.
The silver and gold allowed Athens to build a navy, fight off the Persians as well as the Spartans and transition to an advanced culture that the later Romans did their best to copy. That ore deposit helped to stabilize Western civilization. Hence my coin collection includes a silver Athenian owl.
Now, much gold, silver, and platinum are byproducts of mining for other metals. The U.S. soon found and mined meaningful volumes of silver and gold. The start was some large placer deposits in the southern Appalachians, hence the early Mints built there. More and more shallow deposits of precious metals were found as searchers moved west. The government helped pay for mining incredible deposits of silver. Think of all those silver dollars. Similarly, the huge gold strikes in California and Alaska led to mintage of enormous numbers of Double Eagles to facilitate international trade.
Now, mining and refining is a dead or dying industry in the US because present global economics and government environmental regulations limit the depth at which even rich metal ores may be found and produced at a profit. I saw the end of many mines and mining companies when I was a geology student at Lehigh University in Pennsylvania.
Recently, Obama shut down the last American lead smelter for reasons that may be more political than environmental. That puts a damper on new exploration for new lead-zinc deposits that produce silver as a significant by-product during refining.
I realized while visiting some of the deeper mines in the Appalachians years ago (e.g., Sterling Hill, N.J.) that there was still literally an enormous volume of ore that has never been discovered in the deep, old rocks of the U.S. mountain chains. Why? It is partly because of government political interference, high taxes and regulation of certain toxic metals at the parts per billion level.
Ignoring the benefits of increased economic activity and employment versus possible pollution from relatively small waste pits is not entirely rational. I feel the EPA became obsessive beyond rational limits and cost the U.S. many good jobs at taxpayer expense.
Taxing imports of pre-1933 gold coinage makes no sense. However, taxing newly mined and refined foreign gold (bullion) is economically sound if part of that tax is spent on research at our universities to better understand how much gold and silver remains overlooked in the deep ore deposits that have not yet been explored in U.S. territory onshore and offshore.
A tax that benefits the US economy and gives jobs to people who need them is alright.
Dr. Roger Sassen
College Station, Texas
This article was originally printed in Numismatic News Express. >> Subscribe today
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