Montana Should Do Away With The Penny

This is the first part of a series of recommendations for and interesting facts about western states, which will be appearing here on Wednesdays. The recommendations range from serious to more of a rant than anything serious. In the case of Montana and the penny, it’s more serious than not.

Montana should do away with the penny. Unilaterally. Of course, Montana can’t exactly do away with the penny unilaterally, but they can and should be the first state to render it useless. Or, at least, I don’t see why they can’t.

Montana, you see, has no sales tax. Like Oregon and other states, it lacks a statewide sales tax. Unlike Oregon, though, it does not generally have local sales taxes, either. You might think that this means that this obviates the need to do away with the penny, but in reality it only makes the problem more pronounced. In Montana, as with everywhere else, prices are set to ninety-nine cents. You know what this means? Lots of pennies. LOTS OF PENNIES. The take-a-penny-leave-a-penny bins overflow with them. Buy something, get a penny back. Buy two somethings, get two pennies back. You have to buy things in increments of five not do deal with pennies back.

How does this differ from states that have a sales tax? There are, after all, a lot of pennies exchanged there, too! Here’s the deal, though: If you’re in Idaho, and you give a penny here and take a penny there and it all evens out in the end. In Montana, however, the exchanges are asymmetrical. You get a lot more pennies than you give, because when you buy something, you have to count out four pennies (three pennies for two somethings) in order to get rid of them. A good portion of the time, you don’t bother. They keep the penny, you put it in the overflowing penny bin. Whatever. You’re not going to mess with it.

On its face, this exposes the problem with pennies in general and why we should do away with them nationally. But nowhere is this more pronounced than in no-sales-tax-states.

So what should Montana do? Montana should require that all transactions within its state be priced to the nearest five cents. Vendors should be required to round down, or alternatively if they round up they should have to post the rounded price on all single-purchase items (a gallon of gasoline, for instance, would be immune because few ever buy a single gallon).

With this, Montana would hopefully be setting the stage for other states to follow suit. Even though the other states have the sales tax which supplies symmetry to penny transactions, it’s still a counterproductive exercise. The states that have a sales tax can simply redesign their tax to x% plus whatever it takes to get an increment of five.

Now, there are some people who say we should do away with the nickel, too. I am not opposed. One step at a time.

Will Truman

Will Truman is the Editor-in-Chief of Ordinary Times. He is also on Twitter.


  1. Yes, yes, and more yes. Is it inflation? Yeah, but so what — it’s long past time. And the penny is legal tender so a merchant can’t refuse it. But that doesn’t mean that the state can’t impose a tax on sales, however silly it may seem to those who love their damned pennies, to push prices UP to the next five cent mark — since no one wants to pay more tax than they have to, they’ll strategically set prices to avoid paying the “penny tax”.

    If Montana shows how a state can get by while being literally penniless, then the rest of the states will eventually follow and we can get back to only coining currency for which the government realizes seniorage.

    • You’re the lawyer, but I was under the impression that legal tender laws only applied to the payment of debts. Vending machines aren’t legally required to accept pennies, for example. And it used to be common for many establishments that sold inexpensive items to accept anything larger than a $20.

      • And I suspect there’s no requirement for a store that sells (say) TVs to accept sacks full of pennies.

          • When I was a teller, I remember getting a $2 bill and for some reason it felt “funny” and not like a real bill. We of course were no strangers to $2 bills, being a bank and all (people sometimes came in to “buy” $2 bills for their grandkids). But this one felt felt different.

            I brought it to my manager, and she said, “they must be pretty hard up if they’re reduced to counterfeiting $2 bills.” Then she told me to get back to work.

      • Oh, I think they’ll take the $50. It’s just a matter of both sides agreeing that they can’t give you change for it.

        (I worked at a movie theater when I was a teen. It was irritatingly common for guys on a date with a girl – usually she was better looking than he was – to flash around a $100 and ask if we could make change for it.)

      • Is a retail transaction not one in which there is debt? I think there is debt involved, if only for a very short time. I agree to buy your cheeseburger for $3.95. Now I owe you $3.95 and you owe me a cheeseburger.

        Now, I’m not well-versed in the law of what “legal tender is,” since we’re talking about currency instead of commercial paper. But IIRC, the law speaks in terms of “reasonability,” that eminently practical yet ultimately undefinable legal standard for everything. If I tender an unreasonable form of payment (395 pennies) for the cheeseburger, you can refuse it, but five pennies along with three quarters, a dime, a nickel, and three one-dollar bills seems reasonable enough.

        Three quarters, two dimes, and three one-dollar bills seems more reasonable, though, and one that gets the government out of the business of making currency of negligible value.

    • “Is it inflation? Yeah, but so what — it’s long past time”

      Wouldn’t it be deflation, because we’re reducing the money supply?

  2. Wil,

    An excellent idea to do such a series, at least from my perpective. I love the west, am deeply interested in its politics and policy issues, and as a former denizen am aware of just how poorly the national media understands/covers the region.

    Re Montana’s lack of sales tax. It’s little known, but the handful of folks who live/work in the Wyoming portion of Yellowstone National Park are perhaps the most lightly taxed folks in the country. Wyoming has no income tax, so they have no state taxes on their earnings, and they do much of their shopping in Montana, Bozeman MT being more accessible than the nearest Wyoming town (Cody), so much of their spending is untaxed, too. A pretty sweet deal.

    As to your argument here, I like it. Maybe you should propose an initiative.

  3. I’m not sure I can sign on to the no-penny movement for a few reasons, most of which are concerned with the short term rather than long term consequences of such a move:

    1. For selfish reasons: I keep all my spare change and pick up “worthless” pennies off the ground. At the end of the year, I take them into the bank and get, usually, around $60 or $80. If pennies are abolished, it would be harder for me to do this, as people are more reluctant to throw away the silver-colored coins.

    2. In the short-term at least, and probably a generalization of point no. 1, I imagine poorer people might have a (marginally) more difficult time in a penniless US. There are still things that it’s not unrealistic to pay for with pennies. In Chicago, a dozen corn tortillas fetches 39 cents, before tax, at my grocery store (and, I hear, they’re even cheaper in other area stores). Is 40 cents so much worse? Maybe not, but it can be, if only slightly, more difficult to gather 8 nickels, or four dimes, or some combination of silver, than it is to also have a few pennies.

    Probably neither of these objections is dispositive, and I can imagine that after a while, once the penny is abolished, the funds otherwise foregone on pennies will go to contribute and magnify the wealth of nations and we’ll all be better off. But I do think there’s a short term cost here.

    • You really pick up 20 pennies a day? Or is this $60-80 from all your spare change?

      • Oops…I should have made it clear it’s also from my spare change. In fact, probably most of it is from my spare change. Still, I probably get a couple dollars’ worth from the street.

  4. Clearly, you hate Lincoln.

    On the other hand, rounding everything to the nearest 25 cents would make dealing with my building’s laundry room much easier.

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