H.R. 3074 — Common Cents Act, as amended
Executive Summary
H.R. 3074, the 'Common Cents Act,' mandates that the Treasury cease production of the one-cent coin for general circulation and authorizes changes to the composition of the nickel to reduce minting costs. To accommodate the elimination of the penny, the bill establishes a national framework for rounding cash transactions to the nearest five cents, while explicitly exempting electronic, check, and credit card payments. The legislation addresses long-standing fiscal concerns over the negative seigniorage of the penny—which costs more to mint than its face value—while requiring the Federal Reserve to study and mitigate potential impacts on unbanked and low-income communities.
Arguments For
- Fiscal Efficiency: Eliminates the negative seigniorage of the penny, which currently costs the Treasury more than one cent to produce, saving taxpayer dollars.
- Retail Optimization: Streamlines cash transactions at the point of sale, reducing cash-handling costs, register discrepancies, and transaction times for businesses.
- Modernization: Aligns U.S. currency practices with international peers like Canada and Australia, who have successfully phased out their lowest-denomination coins without economic disruption.
Likely Supporters
Arguments Against
- The 'Rounding Tax' Narrative: Consumer advocates will argue that rounding up disproportionately impacts low-income and unbanked individuals who rely heavily on cash for daily purchases.
- Industry Pushback: The zinc industry and associated lobbying groups (e.g., Americans for Common Cents) will fiercely oppose the loss of lucrative manufacturing contracts.
- Implementation Friction: Retailers and consumers may experience confusion and disputes at the register during the initial transition period, despite the legal safe harbors provided.
Likely Opponents
📋 Key Provisions
- Halts the minting of pennies for general circulation while preserving existing pennies as legal tender.
- Authorizes the Treasury to alter the 5-cent coin's composition (e.g., zinc inner layer, nickel outer layer) to reduce production costs.
- Establishes a standardized rounding system for cash transactions: amounts ending in 1, 2, 6, or 7 round down, while amounts ending in 3, 4, 8, or 9 round up.
- Exempts non-cash transactions (credit cards, electronic transfers, checks) from rounding requirements.
- Preempts conflicting State, Tribal, and local laws regarding cash rounding to protect businesses from violations.
- Requires the Federal Reserve to develop a strategic plan and issue reports on coin distribution stability and the impact of rounding on low-income and unbanked populations.
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Verification Guide
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Ceases production of one-cent coins for general circulation.
"shall cease production"
Rounds down cash transactions ending in 1, 2, 6, or 7 cents.
"ends with 1 cent, 2 cents, 6 cents, or 7"
Exempts electronic and credit card payments from rounding.
"electronic fund transfer, check, gift card"
Requires a Federal Reserve report on coin distribution within 90 days.
"90 days after the date of the enactment"