Sunday, November 5, 2017

Fractional Penny Sales Tax Tokens In Illinois.

Sales tax tokens were fractional cent devices used to pay sales tax on very small purchases in many American states during the years of the Great Depression. Tax tokens were created as a means for consumers to avoid being "overcharged" by having to pay a full penny tax on purchases of 5¢ or 10¢. Issued by private firms, by municipalities, and by twelve state governments, sales tax tokens were generally issued in multiples of 1 mill (1/10¢).
Say you bought a dozen eggs for 10¢ and the sales tax was 3%. That would be three-tenths of a penny. So you paid a dime and three 1-mill tokens.

The twelve states that issued these sales tax tokens were Alabama, Arizona, Colorado, Illinois, Kansas, Louisiana, Mississippi, Missouri, New Mexico, Oklahoma, Utah, and Washington. Tax tokens were issued in a variety of materials, including cardboard, brass, bronze, aluminum, pressed cotton fiber, and plastic.

Sales tax tokens were generally regarded as a nuisance by consumers and were replaced in fairly short order by the bracket system of sales tax collection, which averaged out the tax on small sales.

By the end of the 1930s, token use was eliminated in most of the issuing states, with sales tax tokens lingering in Missouri until late in the 1940s.

Compiled by Dr. Neil Gale, Ph.D.

Sales Tax Tokens to Stay in Circulation. 
Article: Urbana Daily Courier, July 25, 1935

SPRINGFIELD... Sales tax tokens issued by the Illinois department of finance to enable merchants to make change in charging the tax will remain in circulation until the United States treasury issues substitutes, Director K. L. Ames of the state department, said here today. Ames said that he had been informed by Atty. Gen. Otto Kerner that the federal treasury is seeking congressional permission to mint coins of one-half cent and one mill denominations.

Action on the part of the federal treasury, Ames said, will be taken to meet the demands of Illinois and other states having a sales tax law. It will solve the Illinois problem, he said, involving the question of the legality of the aluminum tokens issued by the state department. Several hundred thousands of the state tokens are now in circulation throughout Illinois, according to Ames, and they will continue to circulate pending action by the government toward minting coins of the needed denomination.

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