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.
