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Silencer Tax: The Cost of Getting rid of the $200 Stamp

Various incarnations of the Hearing Protection Act and the SHARE Act are churning their way though the legislative sausage grinder and onto social media feeds. In the midst of what is almost unanimously viewed as opportunity for a positive change in deregulation, some comments of dismay and surprise seem to be popping up. People are reading the bill and discovering that the NFA $200 tax might be replaced by a 10% excise tax  and “that's how they'll screw ya!” The discovery of the 1937 Pittman–Robertson (PR) Federal Aid in Wildlife Restoration Act (WR) is apparently both new and alarming to some folks, even though they've been a participant in it with every round of ammunition and firearm they've ever owned.

A little history of the PR Wildlife Act and explanation of how it works might be in order to make a qualified decision on whether this is good news or bad.

In the 1930's, President Roosevelt handed our great-grandparents a “New Deal,” which was a huge wealth redistribution scheme aimed at fending off the economic depression that started in 1929. Unemployment was at 25%. U.S. manufacturing output dropped over 30%. Money value deflated. So the Progressive answer was, of course, to put higher taxes on more things. Under the stresses of the depression, the “temporary” Revenue Act of 1932 began taxing a long list of commodities and services. It was supposed to sunset on June 30, 1934. The category of firearms and ammunition got tagged with a 10% excise tax, payable by the manufacturer on the wholesale value. This money went into the general funds of the federal government to be spent wherever the Roosevelt Brain Trust felt it was best suited to help promote the “3 Rs” of Relief, Recovery, and Reform.


Parallel but separate to the economic Depression, an awareness of nature conservation was growing. And not necessarily in the hippy, anti-hunting way some might associate today. These were sportsmen that realized that *maybe*  just maybe  killing off ALL the bison wasn't the best idea. Game animals we think of as commonplace, such as whitetail deer, were becoming scarce. Wild turkey sightings were a tall tale. Passenger pigeons were hunted into extinction. Economically speaking, firearm and ammunition companies knew that if the USA ran out of delicious targets, they wouldn't be selling much of anything in the future. Which, in the end, would dramatically affect gun ownership and usage for generations to come.

When Congress was discussing discontinuing this tax in 1937, conservationists requested it be repackaged and earmarked for wildlife restoration. Senator Key Pittman and Representative A. Willis Robertson sponsored a bill to collect an excise tax on guns and ammunition and force the funds towards pro-hunting and wildlife causes. It passed with little opposition. And whether you know it or not, you've been paying into that fund with every piece of lead you've returned to the earth since then.


While no one likes a new tax, this one at least escapes a lot of the government good-idea-fairy's grasp. On top of that, it's pretty widely accepted as one of the few taxes that positively affects the people being taxed. Also -shockingly for any tax- it has a positive rate of return to companies paying into it. The PR's sneaky play was the inclusion of wording that prohibits the diversion of fees paid by hunters for any other purpose than the administration of game and fish departments. States have to agree to this provision to receive their chunk of PR funds. As the U.S. Fish and Wildlife Service explains, these funds go to the Secretary of the Interior and on to the States for “acquisition and improvement of wildlife habitat, introduction of wildlife into suitable habitat, research into wildlife problems, surveys and inventories of wildlife problems, acquisition and development of access facilities for public use, and hunter education programs, including construction and operation of public target ranges.”


While most people are unaware of PR and how it works, one anti-gun website discovered it and wrote a scathing condemnation of the entire evil scheme, uncovering that “Game agencies encourage very young children to hunt. They want to ensure the future of hunting and firearms profits!” Hmm. That doesn't sound too bad to me. Public target ranges and youth gun safety programs paid for with your ammo tax dollars is policy guaranteed to make anti-gunners cringe. And the fact that your AR15 purchase preserves “their” nature parks is worth reminding them about. Frequently.

Over the last 80 years, hunting license and firearm tax dollars have been protected from being skimmed off by state governments for other purposes due to PR language. Along the way, amendments starting in the 1970s generally continued in manners supportive of hunters and gun owners. One example would be Rep. Latta of Ohio's amendment, which added on the awesomely-named “Target Practice and Marksmanship Training Support Act.” This authorized a state to pay up to 90% of the costs of acquiring land for, expanding, or constructing public target ranges. Excise tax on bows and arrows were eventually folded in to contribute to PR funds, and a similar fishing tax/protection act exists to benefit our perch-pursuing sportsman brothers.


As hinted at above, studies show that the excise tax has a positive effect on gun and accessory sales. If there's a new public shooting range, people are going to go shooting and buy ammo. If there's a new hunting ground stocked with game, some new shotguns are going across the counter of your local gun shop. From creating jobs in the guide business to sales of each round of ammunition, the PR results in opportunities for the firearms industry to make money. “How many tax models in our country today can show an $11 to $21 return to the company on every dollar spent,” said Congressional Sportsmen's Caucus Co-Chair U.S. Congressman Jeff Miller, R-Fla. “This is one of the most impressive examples of how an American industry can profit and bolster the economy while restoring and improving our nation’s cherished natural resources.”

All in all, PR taxes have been somewhat invisible to the end user because of their collection at the wholesale level. However, their collection has contributed around $11 billion ($787.5 million in the fiscal year 2016 alone) towards things the firearms community generally agrees on as good. The PR even benefits folks that don't chip in: over 70% to 95% of citizens enjoying these funded areas are not even shooters, fishers, or hunters. They just camp, hike, and explore these same managed lands and admire or photograph their managed wildlife.



After all the tree hugging, deer petting, and New Deal history, it comes back around to death and taxes. In this case, the death of one of the most onerous taxes of the 1930s: The National Firearms Act. The saddling of Maxim's little harmless dime store tube with a big killer $200 federal stamp. The HPA aims to take sound suppressors off the NFA and lump it in with common Title One firearms such as rifles. The death of the silencer's NFA tax would be great news if it passes: No more $200 end-user tax every time one changes hands. But, in the politics of give and take, it becomes taxed like a pistol with the same excise tax you've always paid whether you knew it or not. The SHARE Act's language of Section EC. 1507 amends the Internal Revenue Code by adding “firearm silencer or firearm mufflers” to the list of “Articles taxable at 10 percent.”



People who don't understand PR's wholesale taxation arrangement are worried that a $1000 silencer would now have $100 due tax on it that wasn't due before. Even though that would be half of what they pay now on an NFA stamp, it's still not so. While wholesale-to-retail markup can vary wildly from maker to maker, let's make some educated assumptions on the pricing of the common .22LR silencer. It might have an MSRP of $350, a dealer cost of $225, and a distributor cost of $175, if the manufacturer chooses to participate in two-step distribution. The first sale ($175) is the number that is taxed, and at 10%, that's $17.50. And, yes, that's $17 bucks which assuredly will be passed along to the consumer, but first folded through the dealer and distributor on its way, where it might get rounded up or down a bit. That sort of taxation on sound abatement might still be theft, but most folks should be less offended by having $17.50 pickpocketed towards a good cause than having $200 pinched just to participate in an annoyingly long waiting period.

Keep in mind that a PR type tax is paid one time only. Whereas each time an NFA item changes hands, another $200 transfer tax is due (which pretty much prevents a widespread used suppressor market). End users would not be taxed on downstream transfers as they are now. This would create, for the first time since 1934, a valid secondhand market as well as potential for manufacturer trade-in deals on old suppressors. Additionally, we know that deregulation, of course, will also allow the market to grow. Through this, we can expect to see some cheaper silencers very quickly due to the scale of economy change in manufacturing them. This will further cut down the tax basis of a wholesale suppressor and therefore the total price to the end user. In short, there are exponential positive consequences to the consumer whether they're hunters or just shooters that don't want to ruin their hearing. Add to that the positive consequences of increased PR funding going to hunting areas and public lands, and you've got a better deal than you have now  by far.




Kel Whelan is an independent consultant to industry and government on silencer business and technology with more than 20 years of experience in manufacturing, design, sales, distribution, branding, and politics throughout the NFA industry. By way of disclosure, he owned, managed, and sold a silencer company and was one of the three founding directors of the ASA.

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