Myth #1: Elimination of the penny would lead to higher prices.
This claim is based upon a flawed study that found a majority of prices would be rounded up rather than rounded down. This would be true if stores did not change pricing strategies (99 cents to 95 cents, for example), there were no sales tax (which randomizes the direction of rounding), and people did not purchase more than one item (which also randomizes the direction of rounding). If these factors are included then, on average, there will be no net change in prices. Indeed, a recent study by Robert Whaples, chairman of the economics department at Wake Forest University, has confirmed that rounding is neutral.
Myth #2: Elimination of the penny will hurt charitable causes.
This is not obvious, because the charities currently asking for pennies will instead ask for nickels. Will the charities recieve more or less than one fifth the number of pennies they currently receive?
Myth #3: The penny produces a profit for the Treasury.
Luckily, this argument is no longer made, as all sides agree that it now costs more than a penny to make a penny.
Even if this were not the case, it is a silly argument. The treasury could always obtain an infinite "profit" by printing a trillion one hundred dollar bills. They do not do this because printing bills and minting coins increases the supply of money and causes inflation, thus decreasing the value of all the rest of the money in circulation. This "profit" is therefore really just a hidden tax.
