As of today, Canada's penny is no longer legal tender.
Many of us have heard that it costs more than a penny to make a penny. That is, in fact, true. According to Chris Isidore, a CNNMoney reporter, the U.S. produced and shipped 5.8 billion pennies to banks last year at a cost of 2 cents per penny.
Right now, there are over 150 billion pennies in circulation. A BBC article from this summer worked out a few interesting examples of just how many pennies there are floating around our country right now. All the pennies in circulation weigh more than 8 Titanics and would stretch 60% of the way to the moon if they were stacked on top of each other. And, if you were immortal and incredibly bored (actually, a likely fate of the immortal), counting one penny every second, it would take you 4,756 1/2 years to count them all.
Simply put, there are a lot of pennies and their overall utility is questionable at best.
Simply put, there are a lot of pennies and their overall utility is questionable at best.
So, what are they arguments for or against a penny-less America?
First, the obvious anti-penny argument: it costs more to make it than it is actually worth. So, the government loses money on every penny it makes.
Some say it would speed up transaction times for businesses with cashiers. This would mean shorter lines for consumers and, hopefully, more transactions for businesses.
Rounding prices, however, is generally not view kindly by consumers. This past summer Chipotle stopped rounding prices at their busiest stores, both up and down, to the nearest nickel after customers discovered the practice on their receipts, and were none-too-pleased. Still, some hope the forced "take-a-penny, leave-a-penny" concept can be accepted by consumers to save time (which is money, right?).
Those who want to hold on to the penny, such as Americans for Common Cents, cite a Penn State economics professor's study that estimates Americans would end up pay an extra 2 to 4 billion in "rounding taxes" over 2 years. However, a Wake Forest professor disagrees, claiming that consumers would break even if every transaction was rounding to the nearest nickel because so many pennies fall out of circulation each year. All these lost pennies cost the government more money to produce, thus burdening the tax payers anyway.
A penny-less America may sound like a Great Depression era news headline, but such a change could help us avoid that very fate.
Harrison Tucker
Sources:
http://money.cnn.com/2013/02/04/news/economy/end-of-penny/index.html?iid=HP_LN
http://www.bbc.co.uk/news/magazine-18586854
http://business.time.com/2012/08/30/chipotles-fuzzy-math-why-they-stopped-rounding-customers-out-of-change/
Those who want to hold on to the penny, such as Americans for Common Cents, cite a Penn State economics professor's study that estimates Americans would end up pay an extra 2 to 4 billion in "rounding taxes" over 2 years. However, a Wake Forest professor disagrees, claiming that consumers would break even if every transaction was rounding to the nearest nickel because so many pennies fall out of circulation each year. All these lost pennies cost the government more money to produce, thus burdening the tax payers anyway.
A penny-less America may sound like a Great Depression era news headline, but such a change could help us avoid that very fate.
Harrison Tucker
Sources:
http://money.cnn.com/2013/02/04/news/economy/end-of-penny/index.html?iid=HP_LN
http://www.bbc.co.uk/news/magazine-18586854
http://business.time.com/2012/08/30/chipotles-fuzzy-math-why-they-stopped-rounding-customers-out-of-change/
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