Background to sales tax tokens

History

Sales tax tokens are a product of the economically tough days of the Great Depression of the 1930s, though in some states they persisted in use for some time after the Second World War. Their purpose was to allow shoppers to pay precise amounts of sales tax on small purchases, where the sales tax amounted to less than 1 cent, the lowest denomination legal tender coin available. In times of hardship, customers were often loath to part with a whole cent when the tax due was less than that.

The first state-issued tax tokens were put into use by the state of Washington in 1935. Most states that issued them at all ceased to do so shortly after the war, but in Missouri, plastic tokens continued in use until 1961.

In total, 13 states issued sales tax tokens. Ohio had a system of paper receipts that functioned in a similar way; these are not covered here.

Token denominations

Most sales tax tokens are denominated in "mills", where 1 mill is 0.1 cent, or one-thousandth of a dollar. The mill has been a unit of account since the creation of the US dollar, but state sales tax tokens are the first semi-official use of the denomination on issued coins or tokens.

Some tokens are denominated in fractions of a cent. Washington's tokens are unusual in stating the purchase amount on which the tax was levied - 10 cents or less in 1935, and 14 cents or less later on, when the tax rate increased.

Token characteristics

Most of the tokens are made of aluminium, fibre, or plastic, with a minority, usually for 5 mills, in brass. Many have centre holes or non-round flans. The material choice partly reflects the tokens' low face value and the straitened circumstances in which they were issued, but the choice of material and the unusual shapes also helped to ensure the tokens were not confused with official Federal currency. The Federal government did from time to time voice concerns that state-issued "coinage" might interfere with its own constitutional responsibility to provide a uniform coinage.

There are several varieties not covered here:

• Minor and unintentional variations caused by dirty or broken dies, imperfect planchets, or misplaced holes;
• Subtle variations in colour of fibre and plastic tokens;
• Apparent patterns or trial strikes not intended for circulation.