Is it time to drop the U.S. penny?

For every one cent produced in the United States, it costs the taxpayers 1.6 cents.

With this information, the question that is being asked now is: should the federal government abolish the penny? With rising copper prices, the U.S. Mint is seeking out cheaper metal alternatives, but this means it’ll still cost more than a penny to produce a penny.

In total, the U.S. Mint lost $55 million last year creating the one-cent coin because it cost 1.8 cents. This cost has decreased because of production techniques that have vastly enhanced and have allowed the agency to cut costs.

President Obama inserted an element into his 2015 fiscal budget released earlier this year that would phase out the penny, a move that would follow nations like Australia and Canada that abolished their own penny in the last couple of years. Former Canadian Finance Minister urged everyone with pennies to donate them to charity.

Moving forward, proponents also purport that the U.S. should get rid of the nickel, too, because they have essentially become useless and unneeded in today’s economy of digital money and rising prices.

“Although calls for dropping the penny are not new, the response—at least outside Canada—has been resounding silence,” wrote Brookings Institute’s Henry J. Aaron late last year. “Perhaps, the problem is not that advocates have been too bold, but rather that they have been too timid—let’s drop not just pennies, but nickels too and stop using the rightmost decimal place at all. I can’t think of any good reason not to do so.

Critics say, however, that eradicating the penny would hurt the poor, and poverty activists present the case that the most vulnerable in society benefit from penny drives and other type of promotion to boost charitable contributions.

Nevertheless, if the U.S. were to push ahead with eliminating the penny, how would it work exactly? Well it isn’t difficult: in Canada, all cash transactions are simply rounded to the nearest nickel: $1.02 is rounded down to $1.00 and $1.04 is rounded up to $1.05. The remaining debit, credit or check transactions do not require any rounding up or down. In the Great White North, the penny still maintains its value in perpetuity and can be permitted in all kinds of transactions.

In other words, the penny would still be in existence, but it just wouldn’t be produced anymore. Therefore, the cost to the taxpayers diminishes and this money is then allocated elsewhere in the budget.

Of course, we’d lose our favorite penny adages over time, including a penny for your thought, my two cents, penny pincher, pretty penny and the old saying that our grandparents would often tell us: a penny saved (or found) is a penny earned.