Thursday, June 03, 2004
Annals of numismatics: the war on the penny
Two of my favorite commentators on matters of import great and small, Professor Bainbridge and William Safire, are writing about the proposed abolition of the penny, the former linking to the latter's call to arms.
Mr. Safire heaped scorn on the penny -- a slang term, by the way, for our "one cent" piece -- as profoundly wasteful in his column yesterday, calling for its abolition. Indeed, Safire does a wonderful job dispatching the few arguments in favor of the penny (merchants will "round up" their prices being the most common and least persuasive), but then quite bizarrely attributes its persistence to the allegedly powerful "zinc lobby," zinc being the main constituent of the one cent coin for the last couple of decades. Bainbridge, correctly, disagrees:
Bainbridge is right that the coin collectors would go bananas if the Lincoln cent were abolished, at least before its 100th anniversary in 2009. I do think, though, that numismatists could live with the abolition of the Lincoln cent following some sort of huge profit-generating commemorative centennial issuance.
Much more significantly, the penny allows for the politically acceptable collection of sales taxes on small-ticket items (presumably people use credit or debit cards to pay for most larger purchases, so coins aren't necessary). Why is politics involved? Sales taxes, which are owed by the merchant, would still be collected by the states. Without the penny to permit the pass-through collection of small amounts of tax, however, merchants would have to reprice their low-priced items to include the sales tax, something they are generally loathe to do. If the penny disappeared, the new hassle of petty transactions for cash might call the attention of voters to the high sales taxes that many states now impose. State politicians need that like a hole in the head, especially since they can free ride off of the Feds underwriting the production of the cent.
Mr. Safire heaped scorn on the penny -- a slang term, by the way, for our "one cent" piece -- as profoundly wasteful in his column yesterday, calling for its abolition. Indeed, Safire does a wonderful job dispatching the few arguments in favor of the penny (merchants will "round up" their prices being the most common and least persuasive), but then quite bizarrely attributes its persistence to the allegedly powerful "zinc lobby," zinc being the main constituent of the one cent coin for the last couple of decades. Bainbridge, correctly, disagrees:
Hah. Silly man. It is not the zinc lobby that preserves the penny, but rather an unholy alliance of coin collectors and state taxmen. Seriously.
Bainbridge is right that the coin collectors would go bananas if the Lincoln cent were abolished, at least before its 100th anniversary in 2009. I do think, though, that numismatists could live with the abolition of the Lincoln cent following some sort of huge profit-generating commemorative centennial issuance.
Much more significantly, the penny allows for the politically acceptable collection of sales taxes on small-ticket items (presumably people use credit or debit cards to pay for most larger purchases, so coins aren't necessary). Why is politics involved? Sales taxes, which are owed by the merchant, would still be collected by the states. Without the penny to permit the pass-through collection of small amounts of tax, however, merchants would have to reprice their low-priced items to include the sales tax, something they are generally loathe to do. If the penny disappeared, the new hassle of petty transactions for cash might call the attention of voters to the high sales taxes that many states now impose. State politicians need that like a hole in the head, especially since they can free ride off of the Feds underwriting the production of the cent.
0 Comments:
