Introduction & History
What two things are sure in life – Death
and Taxes. Unfortunately or fortunately most of us have
finished taxes I am hoping. Lets hope that death is
at least a little way off. The idea of sales
taxation is not a new idea. The sales tax idea was
borne in ancient cultures but is only written in history as
having started with Greek emperor Augustus in 9 AD and
continuing until 60 AD under Nero. It the disappears until
about the 12 th century when it reappears in
Europe. The first
formal laws in Europe were passed in 1292 by France of 1/2% to
be collected on the sale of all goods except for
food.
Modern taxation in the United States was
first proposed in 1862 during the Civil War as the Union
government struggled with finding a way to pay for what
appeared to be a long term and expensive civil war. The proposal was for a
1% National tax.
The tax bill was tabled and never was acted upon. Then in 1921 a
national sales tax of 1% was again proposed to help pay for
the debt incurred during World War I. Again this measure was
defeated, but not before tokens had already been
produced. The
tokens were supposedly all destroyed.
In 1921 West Virginia was the first state
to pass legislation for a sales tax. In 1929 Georgia passed
similar legislation but neither took the time to figure out
how to enforce or implement the system, so there was no
progress.
In 1933 eleven states passed legislation
for sales tax and by 1940 over 30 states had enacted
legislation and systems for sales tax collection due to the
success of the early programs at generating revenue for the
state. April 1 to
May 10, 1933 Kewanee, IL was the first city in the nation to
produce and use sales tax tokens for a 3% tax. It is 16 mm in diameter
and made of copper. The Illinois state
supreme court struck its use down and they were removed from
circulation just a few weeks after issue. July 1 that same year a
2% sales tax was passed and the tokens again circulated.
Michigan and California also passed
similar legislation in 1933, followed by Ohio in 1934. In 1935 Washington
state caused a stir when their tax laws were passed and
implemented on May 21, 1935. The US government and
treasury department filed suit against the state of Washington
claming the use
of sales tax tokens as an assault on US coinage. The governor of
Washington refused to back down and the issue was tabled by
the government.
On July 2, 1935 the Illinois state
government issued state tax tokens. And the local tokens
were removed from circulation slowly. July 10 th
just eight days later the state of Illinois was asked to cease
the distribution of its round tokens because they were too
much like US dimes. The state was forced to
change their design. This resulted in the
production of square pieces 16mm x
16mm.
On July 22 nd the United
States government backed by President Roosevelt and Treasury
Secretary Henry Morgantheu proposed a ½ cent and a 1/10
th cent coin in copper and aluminum respectively.
These coins were
never produced and the idea was effectively abandoned on
August 21 st.
In late July New Mexico issued its tokens
that it had held awaiting the US government resolution. In August Missouri
issued it’s Milk-Cap tokens (called this because they
resembled a milk cap and were produced in Kansas City by a
prominent milk bottle cap manufacturer. You have both of these
in your packets also. September 1, Colorado
issued their tokens and in all 12 states issued sales tax
tokens. Ohio, Kentucky, West Virginia, North Carolina and
Michigan issued paper stamp or punch card systems that are not
considered to be part of the 12 state token
issues.
Even when some state governments refused to issue sales
tax tokens, many businesses issued them on their own to help
their customers (e.g., California). Local issues are
primarily associated with Washington and Illinois, but several
other states including Kansas had a few. An interesting fact is that Kansas was
the first state to suspend the token usage in July 1939 and
Missouri was the last state to repeal the use of sales tax
tokens from the books in 1961. Most states had already
effectively stopped their usage after World War II. They lost
favor during the war due to the additional complication of
ration tokens and stamps.
How and
why were they used?
Merchants had to pay sales tax to the state on the
total amount of sales made by the merchant during each day’s
sales. You can imagine that if the sales tax rate is 3% and a
child buys a 10c piece of candy there is no way to collect the
three-tenths of one cent. If you rounded down that meant that
the merchant could not collect anything for the tax. If you
rounded up the state was gaining 7 tenths of a cent on every
10 cent sale. You
can see that if the merchant sold 100 pieces of candy he was
loosing 30 cents a day in tax revenues to the state, so the
token was born. This allowed the merchant to take 11 cents for
the first piece of candy and give change back in mills. The
next time you wanted to buy a 10c candy you could present the
merchant with the 10c and a token and complete the
transaction. This allowed the merchant to collect the sales
tax on each transaction.
A mill is
1/1000th of a dollar or a tenth of a cent. As
you can imagine, people did not like having to carry a second
set of coins, and to further complicate matters, different
states issued different tax tokens. 1 and 5 mills are the most
common denominations, but other denominations include: 1/5
cent, 1 1/2 mills, and "Tax on 10c or
less."
There are
over 500 different sales tax tokens that can be collected from
13 commonly issued states. I include Ohio stamps because most
of the collectors do to. There is also anti-sales tax token
memorabilia from many other states to collect. Most tokens are
inexpensive and fairly easy to come by. All in all over a
billion sales tax tokens are estimated to have been
produced.
Most coin dealers have no idea what to charge for these
tokens, Many
tax tokens are quite common, and can often be found in coin
dealer "junk boxes" for as little as 10 cents. Others tokens
are known to be much scarcer, however they too sometimes show
up in “junk boxes” from time to time. A few, such as the New
Mexico 5 mill black fiber are truly rare, and worth up to
$100. There are
also much sought after pattern tokens made by the
manufacturers to win the contracts for minting from the states
that issued them.
There are state sponsored and issued tokens as well as
"Provisional Issues" from specific towns and specific states,
usually Illinois and Washington. These are much scarcer than
the state issues, but prices are still fairly low, as there
are a limited number of dedicated collectors. In addition to tokens
many towns printed sales tax "tickets" or scrip (sometimes
spelled script) printed on paper or cardboard stock, usually
on vibrant colors or security patterns. As you can imagine the
survivability of 70 year old cardboard and paper is not very
high. Best of all
there are only two grades for sales tax tokens, circulated and
uncirculated.
This allows almost anyone with a modest education in
coin collecting and any budget to collect sales tax tokens
without loosing their wallet or their
interest.
State issued sales tax tokens vary widely. Copper,
brass, paper, cardboard, fiber, aluminum, zinc, plastic and
even wood were used. Many were colored. The language ranged
from Arizona's practical: "to make change for correct sales
tax," to blunt in Louisiana: "Public Welfare Tax Token" and
Oklahoma: "For Old Age Assistance." Perhaps my favorite is
Missouri’s second generation Milk-Cap token. “… helping to pay
for old age pensions, support of public schools, care of poor
insane and tebercular patients in state hospitals and relief
of needy unemployed in the state of
Missouri.”
There was a national sales tax proposed in 1921 that
was taken to such a point that many millions of fiber tokens
where printed and when the legislation was shelved they where
all destroyed. Or
so it was thought, there have been rumors of 4 to 6 pieces in
existence.
