A debate exists within the United States government and American society at large over whether the one-cent coin, the penny, should be eliminated as a unit of currency in the United States. The penny costs more to produce than the one cent it is worth, meaning the seigniorage is negative – the government loses money on every penny that is created. Several bills introduced in the U.S. Congress would have ceased production of pennies, but none have been approved. Such bills would leave the five-cent coin, or nickel, as the lowest-value coin minted in the United States. Other countries have also withdrawn coins no longer worth producing, such as Canada ending production of the Canadian penny in 2012. The most recent time that the United States withdrew the lowest-value coin from circulation was with the half-cent coin (hay-penny), which was withdrawn in 1857; the 1857 half-cent coin was worth approximately cents in dollars.

Legislation

In 1990, United States Representative Jim Kolbe ( R-AZ) introduced the Price Rounding Act of 1989, H.R. 3761, to eliminate the penny in cash transactions, rounding to the nearest nickel. In 2001, Kolbe introduced the Legal Tender Modernization Act of 2001, H.R. 2528, and in 2006, he introduced the Currency Overhaul for an Industrious Nation (C.O.I.N.) Act, H.R. 5818. While the bills received much popular support from the public, all failed to become law. In 2017, Senator John McCain (R-AZ) and Senator Mike Enzi (R-WY) introduced S. 759, the Currency Optimization, Innovation, and National Savings (C.O.I.N.S.) Act of 2017, that would stop minting of the penny for 10 years and would study the question of whether production could cease thereafter. The bill died at the end of the 115th Congress with no hearings held by the Senate Committee on Banking, Housing, and Urban Affairs.

Arguments

Production and distribution costs

Limited utility of pennies

Effect on prices

Public opinion

Historical precedents

There has never been a coin in circulation in the U.S. worth as little as the penny is worth today, although currently other countries have coins with less purchasing power in circulation. Due to inflation, one nickel in 2017 was worth approximately what a penny was worth in 1974. When the United States discontinued the half-cent coin in 1857, it had a -equivalent buying power of about cents. After 1857, the new smallest coin was the one-cent, which had a -equivalent buying power of cents. The nickel fell below that value in 1973; the dime (at 10 cents) fell below that value in 1981; the quarter (at 25 cents) fell below that value in 2012.

Environmental and health hazards

Zinc can cause anemia or gastric ulceration in babies that inadvertently ingest pennies made after 1982. A single penny can kill a pet. Also, the mining of zinc and copper causes toxic pollution and is especially undesirable when considering the valuable metals being used to produce a coin with little utility.

Nickels

As of 2022, nickels cost US$0.1041 2022 to produce and distribute, providing an argument for elimination similar to the penny's production at a loss. The current face value of a nickel is also well below that which the last remaining lowest-denomination coin (the penny) held at the time of the half-cent's elimination in 1857. A penny in 1977 was worth the same amount as a nickel in 2023. A nickel in 1977 was worth a quarter in 2023.

Lobbying

Other options

Economist François R. Velde suggested in 2007 that the government make the penny worth five cents. This change would add about $6 billion to the money supply. Congress passed the Coin Modernization, Oversight, and Continuity Act of 2010, which requires the Treasury to report on possible new metallic coin materials. In the 2014 Biennial Report, Appendix 4, the Mint reported that the previous study had "found that there was no more-cost-effective alternative material for the one-cent", and thus recommended that it continued its current mix of copper and zinc.

Precedents in other countries

Many countries outside the United States have chosen to remove low-value coins from circulation: However, many nations still use coins of similar or smaller value to the United States cent. In some cases, while the nominal value of the coin may be smaller than that of a US cent, the purchasing power may be higher:

Laws regarding melting and export

On April 17, 2007, a Department of the Treasury regulation went into effect prohibiting the treatment, melting, or mass export of pennies and nickels. Exceptions were allowed for numismatists, jewelry makers, and normal tourism demands. The reason given was that the price of copper was rising to the point where these coins could be profitably melted for their metal content. In 1969, a similar law regarding silver coinage was repealed. Because their silver content frequently exceeds collector value, silver coins are often sold by multiplying their "face value" times a benchmark price that floats relative to the spot silver price per ounce. According to American law, US citizens are allowed to melt foreign coinage (e.g., Canadian pennies) for personal or commercial use; however, by doing so they are usually violating the laws of the country that issued the coinage in question.