Monday, February 12, 2007

New Dollar Coins and the Penny debate

The government is creating a new series of dollar coins, extending the use past the  Susan B/Sacagawea area.  The format will be like the modern Quarter, in that the face will cycle through all the Presidents of the USA in order, starting with Washington this year. 

One wonders what they are trying to accomplish with this, other than people buying the coins for the single purpose of taking them out of circulation and into collections.   There is considerable discussion about the option of replacing the dollar bill with the dollar coin going forward, but the arguments against doing that are still strong.  Dollar bills are much more easily carried around. 

I think that in time, once inflation gets to the point that bubble gum costs a dollar, replacing the bill might be a better idea, but for now the bill stays.

However, I’m still a proponent of removing the penny from circulation entirely.  People still seem not to agree with that, as the AP poll indicated that over 70% of the 1,000 people asked said that it shouldn’t be eliminated.  However, how many people are aware that the penny costs more to make than it’s worth in the marketplace (1.4 cents per penny)?  How much money would the government (our taxes, remember) save not having to manufacture pennies any more?  Their only purpose these days is to make up the difference in sales taxes, which are calculated as a fraction of a dollar.  Sure, you say, that fraction often ends up in between nickels, i.e. 3% sales tax on two dollars is 6 cents).  But at another level, 3% of $2.50 is .075 cents, and we don’t worry about the .5 cents.  It’s meaningless.  As are pennies in this day and age.

I’d rather save the tax revenue.

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