The IRS’s Least Favorite Collectible

It would be natural to assume that gold would be treated like an investment by the government. However, US tax regulations put gold in an entirely different category than almost any other serious investment. While many thoughtful people choose to view gold as an investment, the IRS chooses to view it as a collectible. This gives them the ability to harshly tax gains on gold. Gold is taxed at this higher rate because it makes the IRS uncomfortable, as they are unable to control it like they can other assets. They favor other gold related assets, which shows that they don’t fundamentally distrust the investment value of gold, but only gold in its physical form. Gold also threatens many people in the government because it too clearly demonstrates the weakness of the US dollar. Gold poses many problems for the IRS, so they choose to penalize anyone who wishes to own it. 

Capital gains on gold can be taxed at a rate of 28%, which far outpaces regular capital gains. This feels like a disincentive to own gold because it is intentionally designed to be so. The IRS has a harder time keeping track of physical gold than electronic investment assets. The inability to track and control it means that they do not want anyone to own it. Gold is most definitely not primarily used as a collectible, and to suggest so is insulting to the intelligence of US citizens. It was the very basis of our currency for many years and if anything that shows how far the US’s leadership has fallen. Rather than regulating based upon standards of morality or good business practices, the IRS has made this choice to shift reality to be more easily regulatable for them. Dropping the capital gains tax on gold by 8% would mean that millions more Americans would hold gold and millions of Americans would be protected against shocks like the stock market drop of 2008.…