How about start dropping the pennies after a bill reaches a dollar, dropping nickels after 5, dimes after ten, and dropping the change entirely after $25 in a charge.
That’s approximately a 1-4% cut, but retailers forfeit that much for credit card fees anyway. Call it a cash discount.
I don’t know how this relates to federal policy, but it should be done.
Examples
Say you bought something, cashier rings up $1.09. Now that full price is charged with credit or a check. But if you pay cash it drops to $1.05.
If the bill was $3.97 it drops to $3.95, $5.35 stays at $5.35 but $5.43 drops to $5.35, etc. Anything over $25 gets rounded to full bills.
I don’t think that subsidizing cash transactions through bracketed reductions in sales tax is overall beneficial. Sales tax is a simple and foolproof way for the government to take in taxes from transactions, and can (and should) be used as a means to simplify the tax structure of the US.
Many small businesses push credit card transaction fees onto the consumer. This mechanism of incentivizing the use of cash has a similar effect and keeps sales tax simple. This mechanism is also an easier solution to promoting the use of cash (compared to asking all businesses to change all their systems to factor in a bracketed sales tax).
I do think that promoting the use of cash is a good thing, but I don’t think that this idea is the best solution yet. It can use some more refinement.
I think it would be more along the lines of encouragement, or at least staying out of the way. I’d rather see it at some state level, let one or two states try it and see how everyone likes it.