FRANKFORT, Ky. (March 31, 2025) – Last week, the Kentucky House and Senate overrode Governor Andy Beshear’s veto and reinstated a sales tax exemption on gold and silver.
In 2024, the Kentucky legislature repealed the sales tax on gold and silver bullion in an omnibus revenue bill. Gov. Beshear signed the bill but line-item vetoed the tax repeal on bullion. With the backing of Attorney General Russell Coleman, the legislature deemed the veto unconstitutional and ordered the law to be enrolled as statute. Beshear rejected the AG’s opinion and directed the Department of Revenue to collect the sales tax despite the law technically being on the books.
Rep. TJ Roberts, along with a large coalition of cosponsors, filed House Bill 2 (HB2) to end collection of the tax and to provide a legal process for those charged the tax after its repeal to sue in state circuit court for a refund with interest, along with damages.
“We’re not just stopping this overreach; we’re ensuring refunds, interest, and damages for anyone improperly taxed,” Roberts wrote in a post on X.
The House and Senate overwhelmingly approved the measure, and as expected, Beshear vetoed it.
Roberts vowed the legislature would override the veto.
“Last year, we repealed the gold and silver sales tax, but Andy Beshear persistently stood in the way of the will of the people. This year, I will make sure the legislature fulfills the will of the people of Kentucky.”
The legislature followed through and overrode Beshear’s veto. The Senate approved the override by a 31-6 vote, and the House did so by an 80-19 margin.
Within hours of the veto override, three Kentuckians and Money Metals Exchange, an Idaho-based gold dealer, filled a class action suit to recover the sales tax they paid after Beshear ignored the legislature and began collecting the tax anyway.
IMPACT
Taxes on precious metal bullion erect barriers to using gold and silver as money by raising transaction costs.
Imagine if you asked a grocery clerk to break a $5 bill, and he charged you a 35-cent tax. Silly, right? After all, you were only exchanging one form of money for another. But that’s essentially what a sales tax on gold and silver bullion does. By eliminating this tax on the exchange of gold and silver, states treat gold and silver specie more like money. This supports the use of gold and silver in transactions and breaks down the Fed’s monopoly on money.
“Citizens of Kentucky, or of any state in the United States, for that matter, shouldn’t be taxed for trying to use, buy, or transact in honest, sound money,” Roberts said in an interview with the Sound Money Defense League.
“We ought not to tax money – and that’s a good idea. It makes no sense to tax money,” former U.S. Rep. Ron Paul said during testimony in support of an Arizona bill that repealed capital gains taxes on gold and silver in that state. “Paper is not money, it’s fraud,” he continued.
BACKGROUND
The United States Constitution states in Article I, Section 10, “No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts.” Currently, all debts and taxes in most states are either paid with Federal Reserve Notes (dollars), which were authorized as legal tender by Congress, or with coins issued by the U.S. Treasury – very few of which have gold or silver in them.
The Federal Reserve destroys this constitutional monetary system by creating a monopoly based on its fiat paper currency. Without the backing of gold or silver, the central bank can easily create money out of thin air.
This not only devalues your purchasing power over time; it also allows the federal government to borrow and spend far beyond what would be possible in a sound money system. Without the Fed, the U.S. government wouldn’t be able to maintain all of its unconstitutional wars and programs. The Federal Reserve is the engine that drives the most powerful government in the history of the world.
State laws that facilitate and encourage the use of sound money create a playing field where people can push back against the Fed’s monetary malfeasance. Ultimately, it could create a scenario where people can drive out the “bad” fiat money with “good” sound money.
