The Instigator
zander
Pro (for)
Losing
21 Points
The Contender
gahbage
Con (against)
Winning
23 Points

Get rid of the penny!!

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Voting Style: Open Point System: 7 Point
Started: 5/7/2008 Category: Politics
Updated: 9 years ago Status: Voting Period
Viewed: 5,707 times Debate No: 3936
Debate Rounds (4)
Comments (6)
Votes (12)

 

zander

Pro

The United States Government should stop produce current Jefferson nickels and replace them by making Lincoln pennies worth 5 cents and cease a $.01 piece of currency.

Currently, it costs the government 1.3 cents to make a penny and over 7 cents to make a nickel.

Seignoirage allows the government to profit off of minting currency, but only when the coin costs less to produce than its value. For instance, the $20 bill costs about 4 cents to make.

Due to the negative seignoirage value, the creation of nickels and pennies adds to the federal deficit by a considerable amount. We produced over 7 billion pennies and 1 billion nickels, COSTING the government and taxpayers over $150 million.

By stopping the production of Jefferson nickels and substituting them with Lincoln pennies, the cost of the new Lincoln nickels drops 6 cents and halts the production of approximately 6 billion coins, greatly reducing cost.

I'm happy to address further concerns in the next round.
gahbage

Con

I thank my opponent for providing this debate.

My opponent claims that the penny costs more to make than it's worth. However, the government would not lose money overall, since a $20 to $0.04 deficit in the case of a $20 bill would outnumber the extra $0.003 it costs to make a penny.

The penny is also very important for the sake of providing change and paying sales tax. For example, say you want to buy a double cheeseburger from McDonalds' dollar menu. In some states, the sales tax is $0.06, bringing the total cost of that burger up to $1.06. You would need to pay with a $1 bill, a nickel, and a penny. Unless you pay with, for instance, a dollar and a dime, in which case the cashier would need to use pennies to pay you back in change.
Debate Round No. 1
zander

Pro

True, the government makes more money in seignoirage than it loses. Still, just because the government makes money overall, doesn't mean it shouldn't cut out a losing endevour. The present system of nickels and pennies still loses over $150 million a year, regardless of how much it costs to make bills. If we adopt the plan, thats an extra $150 million dollars in the government's pockets that isn't adding to the deficit. Not to mention the fact that adopting the plan would be intrinsically profitable, making money instead of losing it, since the Lincoln nickels would be worth more than cost.

Your second objection is that we need pennies for transactions etc. But, transactions are already rounded. When you buy gas, the price per gallon isn't $3.59, but $3.599. Thats what that miniature number farthest to the right on the sign means. So, rather than rounding off tenths of cents, we would be rounding off full cents.

Some argue this would lead to a 'rouding tax' where buyers are robbed of pennies on every transaction. But, a study was conducted, and simple logic would show, that out of the countless transactions performed everyday, there are an even number of transactions that would round up and round down, leaving the monetary advantage null.

So, we should abolish the penny because they are personally annoying, and would save taxpayers $150 million dollars a year without effecting transactions.
gahbage

Con

"Not to mention the fact that adopting the plan would be intrinsically profitable, making money instead of losing it, since the Lincoln nickels would be worth more than cost."

Maybe I'm reading this quote wrong (please correct me if I am), but in that quote, you state, "...nickels would be worth more than cost." However, in this next quote, you state:

"Currently, it costs the government 1.3 cents to make a penny and over 7 cents to make a nickel."

Thus contradicting yourself and the idea of profiting from the disposal of the penny.

As you say, "the monetary advantage [is] null." Therefore, what good is disposing of the penny? You still haven't showed me an alternative for transactions from change and tax, as demonstrated in my McDonalds example. The only solution I can think of is changing the price of everything to end with a change value of a multiple of 5 (i.e. $1.25, $1.50, etc.). This would not only be costly and tedious, a flat sales tax would have to be adopted by every state ($0.05, $0.10, etc.).

The penny should not be abolished, because it is necessary for sales transactions, and would do more harm than good.
Debate Round No. 2
zander

Pro

The quote you mention "Not to mention the fact that adopting the plan would be intrinsically profitable, making money instead of losing it, since the Lincoln nickels would be worth more than cost." refers to the new Lincoln nickels, not the current Jefferson nickels. Notice it says "adopting the plan would be intrinsically profitable." So, I don't contradict myself and you reinforce the point that the new nickels/old pennies would cost less than current nickels and save the government a boatload of money.

When I say the monetary advantage is null, I am refering to the advantage between buyers and sellers during a transaction. You're woorrying about the change situation during transactions, so I am simply explaining that when you do go to McDonald's, they will round the price, either down or up, and in the long run, prices won't be effected because over the course of several transactions, the rounding will cancel itself out (lose 1 cent, gain 2 cents, lose 2 cents, gain 1 cent, etc, etc.).

The price of everything wouldn't change. It would simply be rounded to the nearest nickel. So, say your Mcnuggets cost $1.22. You pay with $1.25 and the price is rounded down to $1.20 (the nearest nickel) and you get a nickel back.

This means there is no reason, whatsoever, for a new flat tax.

So, not only would abolishing the penny get rid of all those pesky coins, it would save the government, and therefore taxpayers, hundreds of millions of dollars without effecting monetary transactions.
gahbage

Con

"So, say your Mcnuggets cost $1.22. You pay with $1.25 and the price is rounded down to $1.20 (the nearest nickel) and you get a nickel back."

This may seem good, but you are not getting the exact change you deserve; in fact, you are getting more than you should be. $1.25 - $1.22 is $0.03, and should not be rounded up to $0.05. This causes the store, and ultimately the government (since it collects taxes), to lose money, nullifying your saving money argument.

It also has an important flaw: sales tax would still need to be added to the price. Let us still consider the McNuggets as $1.22. In Maryland, the sales tax is $0.06. Even if you rounded to the nearest nickel, the total would be $1.26, and still not be able to provide exact change without a penny. Even if the tax was added first and then the price was rounded, this defeats the purpose of a state-imposed sales tax, effectively making the nationwide sales tax $0.05. Not only does this interfere with a state's sales tax policy, but it also can decrease the government revenue even further.

Due to these complications, the government would not gain enough, if any, of a benefit from abolishing the penny, and would interfere with a state's right to impose a sales tax. My argument also stills stands that the penny is necessary for change transactions, because of these complications.
Debate Round No. 3
zander

Pro

Out of the billions of purchases made every day and the even probability that my change will come out to any random amount, there will be an even amount of loses and gains by each side. I will gain two cents here, lose two there etc. This is a matter of probability. This is why, when you flip a coin hundreds of times, you get even amounts of heads and tails. Analogous scenarios.

This means the government doesn't lose any money from the rounding procedure and neither do consumers. So, they still get the hundreds of millions of dollars saved from switching the nickel and don't suffer any tax burden.

State sales tax is not effected. Whatever amount they tax on products will still come out that much. While I may pick up two cents on the chicken Mcnuggets, I will lose two cents on my hamburger that costs $1.23. This applies to the state in the same way. The state takes six cents out of every transaction, regardless. McDonalds loses two cents, gains two cents etc. This doesn't change because all prices go up six cents, making the probablity of every change interval even still. Abolishing the penny would NOT infringe on states rights.

So, there are no negatives to this plan. There is no 'rounding tax' if we issue change in $.05 intervals. The government and taxpayers don't have to lose hundreds of millions of dollars by minting costly coins and I don't have to pick through my change jar for the useful ones.
gahbage

Con

While rounding $1.22 down and $1.23 up mathematically breaks even, who's to say customers will buy the same amount of McNuggets as cheeseburgers? The gains and losses made from altering prices will not break even unless the purchases of each item do too. Basically, if more cheeseburgers ($1.23) were sold than McNuggets ($1.22), you didn't break even.

Even so, the main problem is not that the gains and losses will break even, it's that you would be unable to make change at all without a penny, in most situations. The problem with abolishing the penny is that if the price of your McNuggets doesn't end in a 5, you can't get exact change.

Take these examples, both in which pennies are necessary.

Example 1: You buy McNuggets ($1.22). The price is rounded down to $1.20. $0.06 sales tax brings the total price to $1.26. You pay with one dollar, one quarter and one penny. Therefore, at one penny is necessary.

Example 2: You buy McNuggets ($1.22). The price is rounded down to $1.20. $0.06 sales tax brings the total price to $1.26. You need one dollar, one quarter and one penny to pay, but you pay with one dollar, one quarter and a nickel. The change is $0.04, so four pennies are necessary.

Also, rounding the change to the nearest nickel is not good because it alters the revenue a store makes and causes you to lose money, or receive money you shouldn't. And the revenue will rarely break even, just as in my first paragraph.

There is no way sales tax can go unaffected when the price is rounded to the nearest nickel. As you can see in the examples, the sales tax had no effect on the outcome of the price of the McNuggets.

Finally, rounding prices would provide a hassle to all businesses and eliminate such things as the dollar menu, the Dollar Store, etc.
Debate Round No. 4
6 comments have been posted on this debate. Showing 1 through 6 records.
Posted by debateboy 6 years ago
debateboy
what do nickels have to do with the penny?
Posted by SweetBags 9 years ago
SweetBags
con, sales tax isn't a set price ($.06), its a percent (.06%).
pro, cite the study, provide a link if you can. it increases your credibility and backs up your case more then just "they did a study"/
con, why would changing prices be expensive? cite some evidence to back up your case.
pro, chances are businesses would change prices to the nearest nickel. so mcnuggets would cost 1.20, not 1.22
con, you say that the government would lose out on taxes collected, but provide no evidence. a case without evidence is like a house without walls, the roof will comedown around you.
again, sales tax is a percent, not a set amount.
how would it eliminate the dollar store/menu/etc? give some evidence. also, most judges ignore any point you bring in last round if it hasn't been brought up before, such as this argument.

advice:
pro, i suggest you cite more studies and provide links, it will increase your credibility and "beef up" your case. if you have other debates on this topic, realize that 1) businesses would change prices to increments of 5, and 2) states would change their sales tax to an increment of 5.
con, same

RFD:
while con raised some good points, the pro was able to both rehab his own case and sufficiently attack cons, so i vote PRO.
Posted by zander 9 years ago
zander
It all evens out. The probability of rounding in each direction is the same. It would round up as much as it rounds down.
Posted by gahbage 9 years ago
gahbage
But rounding after would defeat the purpose of a sales tax, and it would get rounded to the nearest nickel.

$1.22 + $0.06 = $1.28, rounded to $1.30
you've ended up adding 8, not 6
$1.21 + $0.06 = $1.27, rounded to $1.25
you've ended up adding 4, not 6

This alters the sales tax.
Posted by The_Philosopher 9 years ago
The_Philosopher
You wouldn't round BEFORE sales tax, you'd round AFTERWARDS.
Posted by DrAlexander 9 years ago
DrAlexander
Math debates, you gotta love 'em!
I say we go back to bargaining. :D
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Vote Placed by debateboy 6 years ago
debateboy
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