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>>Sales Tax Tokens
During the depression states were desperate to find new sources of revenue. Beginning with Georgia in 1929, more than thirty states enacted a sales tax during the depression. Congress also imposed a federal sales tax on a wide range of products.
If cash was critical for the states, it was even more so for their citizens. Payment of a 3% sales tax on a 10-cent purchase, gave the state an additional unearned 0.7 cent tax from rounding. People resented the sales tax enough without overpaying it.
In the spring of 1933, the business community in the city of Kewanee, Illinois began issuing "sales tax tokens" in the 1/4 cent denomination to customers. The tokens were designed to provide change for partial cents resulting from the sales tax. Within a short time communities throughout Illinois followed Kewanee's example and issued similar tokens.
By the end of the Depression 14 states had authorized the use of either sales tax tokens or paper scrip as change for the taxes. It has been estimated that more than a billion sales tax tokens were issued. 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).
State issued sales tax tokens vary widely. Cooper, brass, paper, fiber, aluminum, zinc, and plastic were used. Many were colored. The language ranged from Arizona's practical: "to make change for correct sales tax," to the politically expedient in Louisiana: "Public Welfare Tax Token" and Oklahoma: "For Old Age Assistance."
The federal government initially reacted with alarm because states appeared to be creating a new currency - something reserved in the Constitution to the federal government. The Department of Treasury tried to halt the growing use of tax tokens, but failed. In July 1935, President Roosevelt proposed the creation of a national one half cent and one tenth cent to meet the demand. Congress refused to act on the proposal. While still threatening legal action from time to time, the federal government effectively acquiesced to the creation of what amounted to a state currency after the President's Congressional defeat. To reduce the federal government's concerns, most sales tax tokens looked very different from the national currency (e.g., plastic tokens, square tokens, holes).
By the end of the depression, the general use of sales tax tokens was over. However, the laws remained on the books for years.<<<
