by Craig Heimericks

Created on: January 21, 2009

I have seen so many arguments on the "NO" side (and even some on the "YES" side) that go like this:

"If we eliminate the penny, then every item that is labeled for 1.98 will have to be rounded up to 2.00 and that is just like an increase in taxes."

What's wrong with that statement? The elimination of the penny coin would NOT eliminate our use of the cent unit of measure! Additionally, rounding doesn't need to take place on every single item in a store, just on your final combined purchase of said items. For example, if you buy 40 items that were originally priced 1.99 each, you would not pay 40X$2.00, or $80.00 (plus tax). You would pay 40X1.99XTAX ROUNDED to the nearest 5 Cents IF and ONLY IF you use CASH for your transaction. Going to pay with Check, debit, or credit? Then nothing changes. No rounding takes place on non-cash transactions. The rounding only exists to eliminate the actual wasteful coin that we use to handle those minuscule transactions. The only institutions that will still accept a penny for legal tender would be banks, which they then remit to the government for smelting.

Furthermore, I propose that every total (after tax) is rounded DOWN to the nearest nickel if the buyer uses cash. Again, no transactions are rounded UP if the buyer uses cash. At most the retailer loses 4 cents per transaction....but what does an equivalent transaction cost to conduct as a check or credit purchase? Checks are expensive to handle, and credit card companies charge a pretty hefty percentage AND per-transaction fee. Retailers would actually save a significant amount of money if people switched to cash to save those 4 cents, not to mention the amount of time people spend COUNTING the pennies to maintain accurate register drawer counts.

The other arguments for saving the penny come from Lincoln supporters. HEY! Who's on the $5 bill? Last I checked, that was Abe Lincoln! Another argument comes from the pretty hefty political lobbying arm of the zinc industry (which makes in excess of $30 million a year through the us mint's purchase of zinc for use in minting pennies). I have a solution; increase the popularity of a $1 coin...made primarily of zinc...with a picture of Lincoln on one side! Another benefit of $1 coins (as opposed to, or used in tandem with) the paper $1 bill is that the coin lasts a WHOLE lot longer and therefore enjoys a higher efficiency in circulation.

The final argument I have heard is that elimination of the penny will hurt charities. Well, someone has to collect all those pennies laying around...and if retailers won't take them, wouldn't a great alternative be to give them to charities? And, once most of the pennies have been collected (and melted down for their raw metals), charities can just start collecting nickels.

All-in-all I think elimination of the penny coin makes a lot of sense, especially considering how in-efficient it's production is, and how often people just throw them around. And since banks will still 'buy' your pennies, you aren't losing any money.

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