Canada is working on retiring the penny.
Should the US do the same?
Should the US do the same?
Actually you would have to require a roundoff scheme something like this:No, if you retire the penny than you end up raising the cost of trivial items because everything gets rounded up to the next 5 cent increment.
So, items that cost $2 or less you end up increasing the cost by 1% - 10%.
It sounds trivial but its not. There is a cumulative effect with the end result of increasing the cost on EVERYTHING by 1% to 3%.
Would you mind if the government increased your taxes by 1% - 3%?
that would be the equivalent if you were to retire the penny. Its counter-intuitive but its the truth. Eliminate the penny, and you more or less increase your total costs by 1% - 3% since increasing costs to the next 5 cent increment will be cumulative...
HERE IS AN EXAMPLE
Instead of truck drivers paying $4.03 cents per gallon they now pay $4.05 per gallon. That extra 2 cents increases their costs by 0.5%. That 0.5% cost needs to be marked up to 1% in order to handle their overhead.
So as a manufacturer, my shipping costs now increase by 1%. So in order to handle that i've got to increase what I charge for production and in order to cover overhead. So, I increase my cost by 2%.
As a retailer buying from the manufacturer, my products have now gone up 2% in costs. So in order to cover that cost I've got to pass that onto the consumer depending on my profit margin. The retail industry usually has a profit margin between 5% - 50% depending on the industry.
So, the increase to the consumer will be anywhere from 2.05% to 3%...
and all of that is due to just getting rid of one tiny insignificant penny
You would if the government told you to do so. Businesses accept credit cards which costs them sometimes up to 6% of their transaction and probably closer to averaging about 1.5% if volume is high enough. Businesses would just raise their prices the 2% they are expected to lose on half their transactions and go with it.In business, you never ever EVER round down. 99.9999999% of the time it would be rounded up to the next 5 cent increment.
You would if the government told you to do so. .
I'd rather keep the penny and get rid of the paper dollar. Replace it with a dollar coin, that can stay in circulation much, much longer.
Personally, I'd be ok with getting rid of all currency > $20, and require all larger purchases to be made with credit/debit cards or other electronic means of exchange. I know some people don't have bank accounts, and there are privacy and security concerns. Going cashless would make life more difficult for drug dealers, and might obviate some street crime. It would have to be phased in gradually so people can adjust.
I don't think the 1-2 cents bit is that huge of a concern for retailers as they love marking things at 99 cents vs $1 in many cases and that loses them 1% on a dollar item or 2% on a 50 cent item. I often wonder if some businesses price things different because of sales taxes as there are prices such that a 1 penny increase in price costs you an extra penny in sales tax. Businesses that don't have computerized cash registers sometimes use total sales before sales tax to figure out what they owe in sales tax and that can net them extra profit as they collect more in tax than they pay out.The government cannot direct a business in matters of pricing. And even if they could, business owners would then just price all their items such that they can round up.
Doesn't matter "how" it happens, all that matters is that it will "happen" and the end result is that you get the price increase I showed...
I say keep the penny. If the current penny is worth more than 1 cent, then make a cheaper penny
I heard they still cost more than 1 cent to make.They did.
If you look at the penny, all pennies dated before 1982 are 100% copper and worth about 3 cents in copper.
Now they add zinc to the copper and if you look at all the new pennies, they are shiny brown/orange-ish and the old pennies are dark brown...
I heard they still cost more than 1 cent to make.