Sales tax token
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 cents. Issued by private firms, by municipalities, and by twelve state governments, sales tax tokens were generally issued in multiples of 1 mill (1⁄10 cent).
Prior to the coming of World War I in the summer of 1914, only two countries, Mexico and the Philippines, made use of a general sales tax for national finance.Excise tax — a transaction tax on the sale of specific items — was broadly used, however, and the idea of a general sales tax was neither unknown nor obscure to political decision-makers in the United States.
Indeed, in 1921 there was a concerted effort to implement a 1% national sales tax in the USA by attaching it to the 1921 national revenue bill and 1922 legislation providing for a soldiers' bonus. Although the proposals for a national sales tax were defeated by an alliance of farmer and labor interests, the state of West Virginia implemented a 1% sales tax of its own in that same year, using the revenue so generated as a replacement for a corporate income tax. Improving economic conditions throughout that decade of the 1920s would leave West Virginia's use of a sales tax unique among the 48 American states.
In the 4th Quarter of 1929 a festering global economic crisis struck the United States. As unemployment skyrocketed, income tax revenue plummeted and defaults on property taxes spiked — and this at the very same time that calls for state spending on relief measures for the indigent and the unemployed were amplified.Georgia's early adoption of a sales tax in 1929 was followed by a wave of sales tax adoptions, spurred on by the deep financial crisis. The year 1933 saw the adoption of sales taxes in no fewer than 11 additional states, including such population centers as New York, Illinois, California, and Michigan. The sales tax would be enshrined as a cornerstone of American state government finance from that date forward.
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