Comment by bbarnett
4 hours ago
I know you're referencing more than pennies, but to speak to pennies, I find the current rounding noise in the US to be weird. Likely, it's just more of the media, talking heads, and youtube personalities trying to turn a nothing into something, story.
Back when we did it in Canada, I don't recall a single person I knew concerned about penny rounding. Everyone was sick of pennies. No one cared. Everyone was happy. And the math seems fair enough:
https://www.budget.canada.ca/2012/themes/theme2-info-eng.htm...
Basically, if something is $1.01 or $1.02, you round down. If it's $1.03 or $1.04, you round up. Rounding is to be applied after all taxes are paid, etc.
Of course, there was also central guidance and, well, everyone just followed it. It's called "having a society".
People blathering on about stores fixing the rounding are morons, there's no way to do so if you buy more than one item. No one gets ripped off with the above method. In the end, it just works out.
And really, who cares?! It's a penny.
As the article points out, there are laws that say people who pay via SNAP debit cards "cannot be charged more than others".
If cash payments are rounded down, but debit card payments aren't, they are in violation of state law.
The article also points out that rollback of pennies in Canada and other places were planned, addressing these kinds of issues. USA is doing it with no such planning.
> there are laws that say
Hmm, maybe this is why it should be handled by Congress and not at the whim of the executive. They can handle all this in one piece of legislation.
If the law is slow to change or there are no available pennies, the stores can adjust the prices to match the expected rounding of prices. I can't imagine someone being prosecuted from rounding a penny but it's a quick and easy way to avoid any doubt.
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The article also points out that some states and a lot cities require retailers to provide exact change. Congress would need to pass legislation to allow rounding nationally. I'm guessing in the meantime they'll continue holding pennies from previous years?
Is gas sold as a whole penny amounts in those locations? Where I am it's always something and 9/10ths of a cent.
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Here in Argentina the law says they must be rounded down. Initially it was for 5 AR$cents, and some shops still has the oficial sign that says AR$ 0.05.
We unofficially drop the coins/bills when the reach ~US$0.03, so now we dropped the AR$50 bills and everythig in cash is rounded down to AR$100 (US$0.07).
(The only exception is the photocopy shop 2 blocks away from home.)
Credit cards are charged the exact ammount, with cents that are irrelevant.
If the national government literally stops creating a certain precision of money, i expect the "exact change" requirement should be invalid.
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I don't want to be glib, but hey what the hey. This is how you can see that the United States is in decline; it can no longer discontinue a coin through legislation.
Congress seems like the most dysfunctional branch of government going on a couple decades now.
They poll worse than the most unpopular presidents
So, round down debit cards too? This seems like a really easy problem to solve.
They're all easily solvable problems. The issue, as GP mentioned, is that the pennies are just stopping without the thought through these problems and planning for the solutions. This was done via a social media post, not a well thought out transition like Canada had.
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SNAP is a major source of revenue for grocers so it seems like you wouldn't have to prod them very hard to do that.
Charges take into account severity of the crime and intent. Nobody is going to get criminal charges for rounding pennies on cash transactions.
Ok— Walmart decides to do something the government doesn’t like re:tariffs or whatnot. They can either plead fealty and retract their decision or the C-Suite can defend themselves against conspiracy to commit a zillion misdemeanors an hour…
Sure, on paper. In reality bored fedcops trying to justify their budgets is how you get plenty of unjustifiable suffering.
The secret service probably won't cause a Waco out of it, but I'm sure they'll do something dumb.
Generally in accounting, insignificant amounts are... insignificant (like how tax calculations are rounded to the dollar).
Please don't strawman this, there is ample evidence for rounding pennies on everyday transactions.
Can you not argue that the average is the same and thus the law isn’t violated?
No, because the law applies to individual transactions, not averages.
Does the law say the average price must be the same, or does it say the price must be the same?
Reality: the supermarket does it the common sense way, and never gets sued, but if they do get sued, the outcome is "you must now refund 2 cents from every SNAP transaction you ever did"
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More annoying especially during the SNAP gap due to the shutdown the law forbids differential pricing in general so shops couldn't offer lower prices for EBT/SNAP customers as a way to help their neighbors.
I'd be amazed if prices weren't engineered so they rounded up far more often than down.
Is that even remotely possible?
You'd have to ensure a positive expectation value over not only every item, but every combination of items a consumer could by. You could focus only on the most likely possible orders (assuming you have the data, I don't know how many stores actually track combination of items bought), but it's not obvious to me that there's a tractable top n most likely orders that gives a reasonable enough estimate of expectation value.
On top of that, you would be interfering with whatever system you already have that sets the cents of each item (whether marketing with 99¢, or % discounts, or a system that tracks that 97¢ means lowest sale, etc).
When the US attempted to transition to the metric system, gas stations raised their prices per unit volume and the American consumer was convinced that the metric system was bad. I have family that think metric is bad because some fringe people thought there should be 10 hours in a day and 100 minutes in an hour, also something like 10 months a year, and the whole thing is bad because some awkward ideas were floated.
Here, it's a question of resolution, with a proven history that transitions screw the consumer, though maybe it won't be so. We're ok with arbitrary hundredths of a dollar, why were we not at thousandths? The American half cent disappeared a long time ago. You still need to include the cents in a tax bill that runs into the millions of dollars.
It's just an awkward stage in inflation. Eventually a US dollar will be worth what a Zimbabwean dollar was, and we won't have $100 bills anymore.
During the French Revolution, they tried to make a right angle have 100 degrees and even recomputed all new trig tables for this new standard. It obviously did not catch on :)
https://en.wikipedia.org/wiki/Gradian
There's no reason you can't have 400 degrees in a circle and therefore 100 for a right angle.
It's a degree scale: you can choose any number you want.
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The Indiana pi bill mandated certain mathematical values be changed to the wrong value.
https://en.wikipedia.org/wiki/Indiana_pi_bill
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Whenever I'm late to a meeting I blame it on the french revolutionary calendar.
> You still need to include the cents in a tax bill that runs into the millions of dollars
Not in all cases. The IRS does not use cents when you file your tax return, they say round to the nearest dollar.
It used to be that they gave you the choice. You could round or you could use pennies but you had to be consistent throughout the return, because even the IRS doesn’t care if you manage to scrape out 49 cents.
Has that changed and it has to be dollars now?
>> and we won't have $100 bills anymore.
Heard some pundits on the radio talking about the elimination of the penny and one of them who worked at the Secret Service as an analyst talked about why the US paper money only goes to $100 bills. He said it was to reduce criminals and illicit activity and criminals having to store it.
He related the story of Pablo Escobar's brother or cousin who was the accountant for the cartel. He said they were losing billions of dollars every year because of various kinds of attrition like rats chewing up the money, it getting too wet and disintegrating. They were losing so much because they had to store it and that wasn't always the best because they had so much of it on hand which seemed to lend credence to his story.
So if you were to get rid of the $100 bills that would further erode the ability of criminals to store so much of it.
I'm not really sure about "He said it was to reduce [...] criminals having to store it". Storage shouldn't be a huge problem - IIRC you can pack about a hundred million onto a standard pallet. Even for Escobar, who is THE outlier here, and assuming he's holding 100% of it in cash, that's about 300 pallets which easily fits into a normal warehouse. If you've got that much money it shouldn't be impossible to keep a warehouse like that clean and dry.
Now, "illicit activity" more broadly speaking checks out to me. The EU stopped printing the 500 euro note because it was primarily used for illegal transactions and money laundering.
When the $1000 bill was retired, a loaf of bread cost a couple cents. There was indeed a push to purge them during the drug scares of the late 20th century. A suitcase of $1000 bills is far sexier than one of $100 bills. It really was porting them.
With bitcoin, it's moot.
A $100 is basically a tank of gas and a sandwich in CA.
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The 500-euro bill is being phased out for similar reasons. Though it's worth noting a 100-dollar bill was worth more than twice what it is today when Pablo Escobar died.
> rats chewing up the money
Profit for the US government. Fixed by plastic bills.
Every $ printed but never redeemed is a significant profit (assuming other costs are low like printing).
Especially yummy when countries just want to hoard the currency - same as selling stamps that are never used:
https://www.federalreserve.gov/pubs/ifdp/1993/460/ifdp460.pd...
I'm pretty sure the OP was talking about a far future where a $100 bill is worth less than the current penny
Though I think the parent means, eventually in the (hopefully) distant future, we'll get rid of the $100 bill because it will be worth too little.
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Nobody wants 10 months in a year. What we want is 13 28-day months a year plus one or two intercalary days. But organized religion gets in the way.
> Likely, it's just more of the media, talking heads, and youtube personalities trying to turn a nothing into something, story.
It's not. Some US states have laws on the books that make it illegal for retailers to round up. The turmoil is that if the retailer can only round down to the nearest five cents, then they stand to lose from one to four cents per cash sale for any sale that is not a multiple of five cents. Add those one to four cent losses up over a large enough number of transactions and the retailer stands to lose a considerable sum over the course of a year. And many retail shops already operate with thin margins anyway, so the loss from "always round down" could erase whatever thin margins some shops already operate under.
> then they stand to lose from one to four cents per cash sale for any sale that is not a multiple of five cents
Which is much less than they're paying the CC companies on card sales.
If it means shops stop charging $4.99 and start charging $5.00, I will be ecstatic.
Problem is it isn't just the $5.99 rounds to $6.00 it is tax. If the end cost is $6.36 will the state be happy with that one penny less? For any state 1 penny per transaction is millions of dollars per year! (note that I had to change your price from 4.99 to 5.99 - 5.00 times any tax rate is an even multiple of 5 and so cannot make the point).
They can add a "total not divisible by 5" fee, ranging from 1 to 4 cents
The other direction avoids a lot of stupid complains. Nobody will complain if the shop gives them a $0.04 gift.
Er... So just adjust prices to whole multiples of 5 cents? Helps math-challenged cashiers too...
Prices in the US are not tax-inclusive, so the effect of sales tax ruins that plan.
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If your shop can be wiped out by losing that little on each transaction it wasn't long for the world anyways... Retail margins are thin by industry preference but they're not 1-4 cents per transaction thin.
Things have always been rounded (tax). There's just a change in what multiple it's rounded to.
And in inflation-adjusted terms, rounding to the nearest nickel now is about as significant as rounding to the nearest penny was in 1978.
Watch 'Pop' (Malcome McDowell) in Son of a Critch :) . I don't remember the episode/season.... where he goes on and on about some $1 bill that will be decommissioned and goes to the bank to get some...
I think people underestimate how many stores used to set prices to avoid pennies. When I was a kid it was frequent. Goose the price so cost + tax rounded to the nearest nickel. But now everything is 23.99 or sometimes 23.95, and they use the pennies place to denote clearance items. Like 19.94 or 3.98.
There’s a reason for this. Prices that force cashiers to make change force them to run the transaction through the cash register so it is recorded, and the amount in the register can be checked at the end of a day or shift to detect theft. If prices are round numbers, such as $1, the cashier can pocket the payment.
I don't get it. Why couldn't a cashier pocket $1.99?
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There are already stores in the US that are rounding their transactions because of the penny shortage that is already happening. Many are just simply rounding all transactions down to the nearest $0.05.
And the reality is that with most price tags ending in .99, retailers will actually round down to .95 to preserve the psychological benefit of not crossing a dollar barrier.
Growing up in Australia 1 cent pieces were gone before i knew what money was. Coming to Canada in 2009 on a trip, i was shocked to see them. They were annoying and instantly drove me crazy, but i felt bad throwing them out. I threw them out anyway, helping reduce inflation
> It's called "having a society".
That must be nice.
Rounding is such a weird boogeyman to me because people are like "the companies are just going to use it to get more money from the customers" but, they're doing that anyway. They don't need this excuse to raise prices they'll just do it anyway.
Same thing when people complain that raising minimum wage will increase prices, meanwhile prices have increased for 50 years completely separate from wages. They don't need the excuse to raise prices they're just gonna do it anyway.
If they want companies to not raise prices the only answer is regulation, but regulation is communism and therefore bad.
I'm so god damn tired.
Let's face it, these arguments are simply post hoc rationalizations. If the proposal were instead to introduce a "milli" coin people would find some way that meant you were getting ripped off too.
This. A large chunk of the US population has been programmed that ALL CHANGE from when they were children in the 1950s is bad.
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> If they want companies to not raise prices the only answer is regulation
Or competition. Consumer electronics are much cheaper than they were in the past, and that's not because of regulation. (To be clear, I'm not saying that regulation is wrong or anything, I'm saying that "use regulation to lower prices" and "remove barriers to competition to lower prices" are both tools in the toolbox.
Since I'm already doing armchair stuff I'll just say that there's an argument to be made that consumer electronics HAVE to be cheaper due to the extremely inflated cost of essentials right now, which is the result of lack of regulation. It's not the system regulating itself it's just more bottom line chasing.
Right. Most gas stations list prices ending in 9/10 of a cent.
Media is just doing media things, ignore them. Nobody I know has even mentioned the penny thing, let alone expressed a strong opinion about it. From my perspective I have seen zero evidence of the American public caring one iota.
> Basically, if something is $1.01 or $1.02, you round down. If it's $1.03 or $1.04, you round up.
So everything's going to be $1.03 or $1.04. Not sure why you think retailers (or any sellers) would ever, ever, ever let this play into customers' advantage.
But apparently pointing out that obvious truth makes me a "moron," because you can think of some clever ways to get around it that retailers surely won't work around.
If you buy two things at $1.03 or $1.04, it's $2.06 or $2.07 and rounds down to $2.05 more often than it's $2.08 and rounds up to $2.10. That's not "some clever ways." That's so basic it's absurd. They don't know how many things you're going to buy. They don't know how many things anyone is going to buy. There's no way to game the entire system for every combination of things people might buy.
Never mind this: When was the last time you bought something in person, in cash, and bought only one thing? Just think it through for a second.
> They don't know how many things anyone is going to buy.
They have historical data, so they know on average people buy 5 things, and they will have data on what impact on purchasing behavior the changes have. Most likely they will tune for increased volume as people spend more to avoid losing a couple of cents.
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If there is no rounding down, it could amount to more.
Hypothetically if you incur 10,000 transactions per year with the max rounding up of $0.04 per transaction, you're out $400.
This doesn't make a huge impact to individuals, but it absolutely will to large volume businesses.
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> Never mind this: When was the last time you bought something in person, in cash, and bought only one thing? Just think it through for a second.
"In cash" is entirely separate from the rounding debate and is just the "people use cards, anyway" argument. It's not relevant to this discussion. This discussion is about cash. I do buy single items at stores sometimes.
> If you buy two things at $1.03 or $1.04, it's $2.06 or $2.07 and rounds down to $2.05 more often than it's $2.08 and rounds up to $2.10.
Where's the law preventing stores from imposing an accounting fee for multi-item purchases, conveniently totaling a few cents?
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Are we pretending that nobody has ever tried phasing out smaller denomination currency, and that we don’t have a vast body of actual case studies to draw from? Why are we running thought experiments at all?
Americans like to pretend that history and the experience of the rest of the world doesn't exist and that things that large numbers of other countries have done successfully (and which even the US has done in the past, in this case, as the half-penny, after all, was phase out a long time ago) are impossible to do successfully.
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As others have pointed out, governments sometimes issue actual guidance on how it's supposed to work when they phase out currency. It's not always "just stop making them and see how the market deals with it."
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but then you buy 2 things, and it's $2.06. round down! or you buy 4 and it's $4.12. round down!
it'll come out in the wash. there are much bigger things to worry about.
You attempt that at my store. To help ensure my business is sustainable in these hard times (/s), I'm imposing a "multi-item order" fee at my store. Now what?
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> So everything's going to be $1.03 or $1.04.
Rounding would apply on the total transaction, not individual items (because otherwise the individual posted item prices would just be false.) So, if there is an abuse route with round-half-down, it is that optimizing buyers would structure purchase to always total $x.01 or $x.02, possibly splitting planned purchases into multiple purchases to achieve that.
But even that isn't realistically a significant issue.
What percentage of people live in a jurisdiction without a sales tax? In my local area, sales tax is 8.8%. And if you take the bridge across the river, tax is 8.9%. So there is already rounding involved, $1.03 becomes $1.12167. Unless of course you bill also includes a mix of taxable and non-taxable items like food, etc..
In practice most items are x.99 anyway.
Sales taxes already result in rounding, which the store could try to take advantage of. They never do. They set prices to end in 99 because it's psychologically more attractive. That will most likely continue. If they're required to price in multiples of 5, we'll see prices ending in 95.
Unlikely that stores would be required to price in 5 cent increments. That would presumably require legislative action and would fly in the face of gas stations today pricing with fractional cents.
But yeah, this isn’t a real issue regardless.
Sales tax gets applied first.
Sales tax rates aren't secret. Stores can set their prices with it in mind. Consumers are far less likely to have sales tax rates memorized and to go through the trouble of checking how things'll work out from the sticker price before they get to the register.