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Kansas State Sales Tax Tokens

I have been interested in coins since I was a young age and enjoy collecting coins and writing about them.

A collection of sales tax tokens for various states.

A collection of sales tax tokens for various states.

History of Sales Tax Tokens

By the time of the Great Depression, many states had started requiring a tax on some types of items sold in retail shops. This created a need for a fractional cent to take care of the sales tax on small purchases of less than a dollar. Thus was born the sales tax token. This small coin or sometimes paper scrip allowed the merchant to collect tax on purchases as small as ten cents. Like most taxes, they proved to be unpopular.

These tax tokens first came into use in Illinois in 1933. Dozens of communities began to issue tokens, typically ¼ cent. Fractional scrip next appeared in Michigan in conjunction with the state’s adoption of a 3% sales tax. California and Ohio both investigated the idea of fractional scrip to be used with tax collection; both states rejected the idea.

In 1935, Washington State passed legislation that called for the use of tax scrip or tax tokens for the collection of fractional sales tax. By this time, the federal government had begun to take notice of the issuance of these tokens used in daily commerce. This was viewed by the federal government as a conflict with their mandate to issue the nation’s money. By the end of 1935, the states of Washington, Illinois, Ohio, New Mexico, Missouri, and Colorado were actively issuing tax tokens or script, or were pursuing the matter. In some states, tax tokens were used up until the early 1960s.

The Introduction of Tax Tokens in Kansas

Compared to other states, Kansas got a late start issuing sales tax tokens. This was prompted by the introduction of a 2% sales tax in 1937. Democratic Governor Walter A. Huxman signed a law into place that required “metal tokens or script” be issued to collect the tax as accurately as possible, stating: “Said metal tokens shall be made from Kansas zinc, if practicable, and shall be the superintendent of the Kansas State Industrial reformatory; script, if used shall be printed by the superintendent of the Kansas state Industrial Reformatory at the reformatory” (Malehorn, pp. 103).

It was soon realized that the Industrial Reformatory at Hutchinson could not meet the deadlines for the manufacture of the tokens, so a contract for manufacture of the tokens went to the Osborne Register Company of Cincinnati, Ohio. This company was founded in 1920 and was in the business of manufacturing various types of tokens, such as those used for transportation and sales tax.

Tokens were distributed out of the State Tax Commission in Topeka, Kansas. They were issued in lots of 500. The initial demand for the tokens was strong but faded with time. The first Kansas token was a two mill—a mill is 1/10th of a cent—token, which represented the sales tax on a ten-cent purchase. For purchases less than ten cents the two mill token represented over-taxation. The tokens were called “Huxies” by Kansas consumers—a dubious tribute to Governor Huxman. As a result of political pressure, a one mill token was issued later in the year 1937.

By 1938 it was reported that 30.9 million two mill tokens and 21.2 million one mill tokens had been produced. Due to the widespread unpopularity of the tokens, political pressure began to build to discontinue the issuance of the tokens. In 1938, a special session of the Kansas legislature was called by Governor Huxman. During this session a bill was introduced to abolish the sales tax tokens. The bill didn’t have enough support and the law remained unchanged.

With a new governor in place by 1939 the Kansas legislature passed a bill that abolished the sales tax tokens. The state did allow the tokens to be redeemed at face value for the following two years. The redeemed and unused tokens remained in storage until 1941 when they were sold for scrap to aid the war effort. State officials later explained the failure of the tokens in Kansas as “owing to the great dissatisfaction of the merchants in having to make change for tokens, and complaint of the general public in having to bother with the tokens” (Malehorn, pp. 104). Kansas was the first state to abolish the tokens and other states would soon follow.

The Two Kansas Sales Tax Tokens

While the other states that issued sales tax tokens had many different varieties and denominations, Kansas only issued two basic designs: a one mill and a two mill token. Both are small metallic disks and are relatively common. The one mill token was issued with a hole in the center to easily distinguish it from the two mill token.

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KS-S1 and KS-S2 Kansas two mill sales tax tokens.

KS-S1 and KS-S2 Kansas two mill sales tax tokens.

KS-S1 and KS-S2 Kansas Two Mill Tokens

KS-S1: Design: obverse and reverse are the same. Year: 1937. Mintage: unknown. Manufacturer: Osborne Register Company and Kansas Industrial Reformatory. Material: zinc. Diameter: 16mm. There are minor variations in the design and material properties. Rarity: R1 (common). Value: $1.00 to $3.00.

KS-S2: Design: obverse and reverse are the same. Year: 1937 to 1939. Mintage: unknown. Manufacturer: Osborne Register Company and Kansas Industrial Reformatory. Material: aluminum. Diameter: 16mm. There are minor variations in the design. Rarity: R1. Value: $1.00 to $3.00.

KS-S3 Kansas one mill sales tax token.

KS-S3 Kansas one mill sales tax token.

KS-S3 Kansas One Mill Token

KS-S3: Design: obverse and reverse are the same. Round center hole 2.5 to 4.0 mm diameter. Year: 1937 to 1939. Mintage: 21,200,000 or more. Manufacturer: Kansas Industrial Reformatory. Material: aluminum. Diameter: 16mm. There are minor variations in the design. Rarity: R1. Price: $1.00 to $3.00.

Each token has a number associated with it. For example, the first listed state issued Kansas token is KS-S1. The KS is the two-letter postal code and the “S” refers to the token as state issued and the “1” is the first variety. Tokens issued by authorities other than the state use an “L” (for local) in place of the “S” for state issued tokens.

Other collectables from Kansas include the boxes that were issued by the state for the 500 tokens and the wrappers used for making rolls of 50 tokens.

Privately Issued Tax Tokens in Kansas

In addition to the state issued tax tokens, organizations issued their own tax tokens or scrip. Some examples from Kansas include scrip from John Jones Grocery in Hutchinson; scrip from Oakes Printing Company in Independence; and a token from Cessna Aircraft Company in Wichita. All the locally produced issues are rare.

References

Schimmel, Jerry F. U.S. State-Issued Sales Tax Tokens, 2nd Edition Revised, 1980.

Malehorn, Merlin K. and Tim Davenport. United States Sales Tax Tokens and Stamps: A History and Catalog, 1993.

© 2021 Doug West

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