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Discussion and Debate
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Politics
American Politics
Should the US retire the penny ?
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<blockquote data-quote="dgiharris" data-source="post: 62201565" data-attributes="member: 322579"><p>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.</p><p></p><p>So, items that cost $2 or less you end up increasing the cost by 1% - 10%.</p><p></p><p><strong>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%.</strong> </p><p></p><p>Would you mind if the government increased your taxes by 1% - 3%? </p><p></p><p>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...</p><p></p><p><strong>HERE IS AN EXAMPLE</strong></p><p></p><p>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. </p><p></p><p>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%.</p><p></p><p>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.</p><p></p><p>So, the increase to the consumer will be anywhere from 2.05% to 3%...</p><p></p><p>and all of that is due to just getting rid of one tiny insignificant penny <img src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" class="smilie smilie--sprite smilie--sprite3" alt=":(" title="Frown :(" loading="lazy" data-shortname=":(" /></p></blockquote><p></p>
[QUOTE="dgiharris, post: 62201565, member: 322579"] 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%. [B]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%.[/B] 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... [B]HERE IS AN EXAMPLE[/B] 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 :( [/QUOTE]
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