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Tax on Bullion Investments Unfair
April 11, 2011



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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About the Author
David C. Harper has been a coin collector since 1963. He joined the Krause Publications editorial staff in 1978 and is currently editor of Numismatic News and World Coin News. He also edits two books annually, North American Coins & Prices and Coin Digest. He is the author of the Class of '63 column that runs each week in Numismatic News. His first bylined numismatic article appeared in the June 1971 issue of Coins Magazine and his various Krause Publications assignments included a stint as editor of the magazine 1980-1983. Harper received a bachelor of science degree from the University of Wisconsin-Oshkosh in 1977. He had a double major of journalism and economics.

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