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Taxpayers lost $105 million on pennies and nickels last year

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Taxpayers lost $105 million on pennies and nickels last year

Old 03-12-2014, 02:01 PM
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Default Taxpayers lost $105 million on pennies and nickels last year

Taxpayers lost $105 million on pennies and nickels last year

By Christopher Ingraham, Updated: March 10 at 10:49 am

In 2013, the cost of making pennies and nickels exceeded their face value for the eighth year in a row. The cost of minting a penny stood at 1.8 cents, nearly twice its face value. Nickels cost twice as much as dimes – 9.4 cents vs. 4.6 cents – despite being worth only half as much.
For a better cost comparison, we can look at the price of putting one dollar’s worth of each denomination into circulation. The U.S. Treasury spends nearly two dollars for every dollar of nickels and pennies it pumps into the economy. In contrast, the same amount of quarters and dimes costs the government less than 50 cents. A dollar bill is even cheaper, coming in at less than a quarter.
Historically, nickels and pennies have always been more expensive on a per-dollar basis than dimes and quarters – this makes sense, since it takes a lot more metal to make 100 pennies than it does to make four quarters. But the government only began losing money on nickels and pennies in 2006.
For some historical perspective I obtained 30 years of coin manufacturing costs from the U.S. Mint, which are plotted below on a cost-per-dollar basis. The chart shows that manufacturing costs rose gradually from 1984 until roughly 2005, at which point nickel and penny costs began to spike dramatically.
Why the spike? Minting costs are primarily driven by the costs of the metals used to produce the coins – copper and nickel for the nickel, and copper and zinc for the penny. As those costs rose in the first half of the 21st century, the U.S. Mint began losing money on pennies and nickels.
All told, the Mint (and ultimately, U.S. taxpayers) lost $105 million on the production of pennies and nickels last year. $105 million may be pocket change compared to last year’s budget deficit of $680 billion, but in an era of budgetary austerity it’s enough to make politicians take notice.
Chief among them is President Obama, who included a provision in his 2015 budget to “assess the future of currency” and ultimately develop “alternative options for the penny and nickel.” What those “alternative options” might be is deliberately left vague.
The least controversial approach would be to simply change the metal composition of the coins to make them less expensive. Canadian nickels, for example, are 95% steel, which makes them cheaper to produce than their American cousins. As of last year, Canadian nickels still cost less than their face value.
The other option would be to discontinue pennies and nickels entirely – Canada ditched its pennies when their production cost approached 1.6 cents, well below what U.S. pennies cost now.
To be fair, the penny has plenty of supporters in the general public. A 2012 survey by penny lobbying firm ‘Americans for Common Cents’ – funded, not surprisingly, by the zinc industry – found that 2/3rds of Americans favored keeping the penny. While any poll conducted by a lobbying outfit should be treated with skepticism, it’s probably safe to say that the penny and nickel hold special places in many Americans’ hearts – see, for starters, the remarkable number of penny-centric phrases and idioms in English.
Past attempts to discontinue penny production have been thwarted by the zinc industry (pennies are 97.5% zinc), and Coinstar, which operates the change-redeeming kiosks that are ubiquitous in U.S. grocery stores, as David Owen reported in The New Yorker in 2008.
But these attempts didn’t happen in the context of a global recession, anemic recovery, and subsequent appetite for belt-tightening on Capitol Hill. Pennies and nickels represent $105 million worth of low-hanging fruit on the budgetary tree.
Moreover, millions of Americans have demonstrated their willingness to pay actual money to Coinstar – 10.9 cents on the dollar – to get rid of their unwanted change. Maybe it’s time for Congress to step up and do that job for free.



© The Washington Post Company




http://www.washingtonpost.com/blogs/...year//?print=1
Old 03-12-2014, 03:36 PM
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I see no reason to keep the penny and nickel in circulation. Round off all prices to the nearest 10 cents and be done with it. While we're at it, replace the $1 bill with a coin.
Old 03-12-2014, 03:43 PM
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Would you round that up or down?
Old 03-12-2014, 06:20 PM
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Best way is to round things up or down in the same way that has always been done with sales taxes and property tax mills. We've lived with rounding to the nearest cent all our lives, rounding to the nearest dime would quickly become no big deal.
Old 03-12-2014, 06:45 PM
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Just thinking out loud, if the US did away with penny and nickel, how much would the gov't end up spending to get them physically out of circulation?
Old 03-12-2014, 06:51 PM
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Replace the dollar bill with a coin?!?!?

What am I supposed to give strippers, Lincoln's???
Old 03-12-2014, 07:05 PM
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All of the above.
Old 03-12-2014, 07:29 PM
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Originally Posted by Dookieshoot View Post
Replace the dollar bill with a coin?!?!?

What am I supposed to give strippers, Lincoln's???
........................
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Old 03-12-2014, 07:45 PM
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Originally Posted by Dookieshoot View Post
Replace the dollar bill with a coin?!?!?

What am I supposed to give strippers, Lincoln's???
Naw- hold the coin in your teeth. Tell her if she can pick it up without using her hands, she can have it.
Old 03-12-2014, 08:04 PM
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That lost $105 million figure is incorrect.....

I just found 3 penny's today on my driveway ...and a nickel last week while at the store.
Old 03-12-2014, 10:41 PM
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They lost $105 million on the pennies and nickels but made how much money on the printing/minting of quarters, $1, 5, 10, 20 50 and 100 dollar bills? It is an acceptable cost of doing business in my opinion.

The pennies and nickels are for the peoples use and should be in use. In the grand picture, we are just printing money anyway and adding to the national debt that will never be paid back so they should just let the $100 bill printing press run a few extra hours to take care of the issue.

They should bring back the $500 dollar bill and start printing them again. They never will simply because it would allow us to transfer large amounts of cash without taxation easier.

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Old 03-13-2014, 07:52 AM
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drop in the bucket, in 15 years everyone will be using plastic this issue will die
Old 03-13-2014, 08:01 AM
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Old 03-13-2014, 09:52 AM
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Look to Canada. It took me no time at all to get used to the Loonie and the Toonie. They are great. You don't have to expose your wallet to pay for most small purchases. You can still use the pennies, in fact most people are glad to get them for collector value. That some coins cost more to mint than their intrinsic value doesn't mean much, because coins stay in circulation for many, many years, which lowers the effective cost.
Old 03-13-2014, 10:57 AM
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If we start cutting out pieces of currency and rounding, how many sellers are going to round the cost of their good or service down? I guess none. Raising the cost of living so the Government can waste the minting money on some other lost cause doesn't sound good to me.
Old 03-13-2014, 11:03 AM
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Originally Posted by Blythe1022 View Post
If we start cutting out pieces of currency and rounding, how many sellers are going to round the cost of their good or service down? I guess none. Raising the cost of living so the Government can waste the minting money on some other lost cause doesn't sound good to me.
Would you really be hurt by an average of less than 4.5 cents/purchase overcharge? Doubt you would even notice. Most things today have a price ending in the numeral "9". They might or might not go up a penny- no big deal.

We've gone for decades with gasoline priced to a fraction of a penny, doesn't seem to be a problem.
Old 03-13-2014, 11:17 AM
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Originally Posted by yarcraft91 View Post
Would you really be hurt by an average of less than 4.5 cents/purchase overcharge? Doubt you would even notice. Most things today have a price ending in the numeral "9". They might or might not go a penny- no big deal.

We've gone for decades with gasoline priced to a fraction of a penny, doesn't seem to be a problem.
If I bought 20 items a day, which wouldn't be unrealistic including groceries, I would loose just under a dollar a day. $365 would have paid the property tax on my tow vehicle last year. It does amount to something.
Old 03-13-2014, 11:25 AM
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Originally Posted by Blythe1022 View Post
If I bought 20 items a day, which wouldn't be unrealistic including groceries, I would loose just under a dollar a day. $365 would have paid the property tax on my tow vehicle last year. It does amount to something.
Yeah, but...

Unless you live somewhere with no sales tax, I doubt individual product prices would change. It's after the sales tax where rounding would be applied, which is exactly what happens today at the register, at the gas pump, etc..
Old 03-13-2014, 11:41 AM
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You would not have my vote.

Last edited by Garett; 03-16-2014 at 01:53 AM.
Old 03-13-2014, 11:41 AM
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Originally Posted by yarcraft91 View Post
Yeah, but...

Unless you live somewhere with no sales tax, I doubt individual product prices would change. It's after the sales tax where rounding would be applied, which is exactly what happens today at the register, at the gas pump, etc..
Why wouldn't the individual items change price? The original producer had to pay more for materials, then it was created, then somebody was paid to ship it to a store, then a store had to pay somebody to stock it, then you bought it. Every one of those steps has a cost associated with it and nobody is going to round their price down to accommodate not having less than a $.10 piece of currency to trade.

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