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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 Roman 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 claiming 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 1/2 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. 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. 2013