A restaurant offers the perfect opportunity to explain the cash-only concept to the kids.
I started thinking about the War on Cash recently over a giant plate of hot buttery pancakes with syrup.
You see, I spent part of my summer vacation in Gatlinburg, Tenn., which some think of as the jumping-off point to Great Smoky Mountains National Park, but I prefer to think of it as the Pancake House capital of the world.
Anyway, my family and I enjoyed a meal at the oldest pancake house in Gatlinburg, and lo and behold, when I went to pay, only cash was accepted.
One of the great benefits of visiting a cash-only pancake restaurant with your children is they might ask, why only cash? And that, my friends, is what you call an opportune teachable moment to explain tax evasion and money laundering to your 7- and 12-year-olds:
“Sometimes, dear, a nice pancake restaurant likes to underreport its sales, which allows them to underreport profits, which allows them to pay less in federal income tax.”
Or, “sweet child, sometimes bad men with profits from illegal businesses like to launder their money by teaming up with a restaurant, which traditionally has a lot of cash transactions.”
“You see, sweet pea, credit cards create a reportable electronic record and therefore less wiggle room to make up however much in legitimate profit a restaurant owner might want. More all-cash transactions means more room to cheat The Man. Pass the syrup when you’re done, love.”
I should point out that even as I explained money laundering and tax evasion to my preteen children, I have no specific reason to think anything untoward happens at the specific restaurant we visited, only that they provided a nice learning opportunity to go with the meal, because of their unusual cash-only policy. And the pancakes were simply delicious.
Of course, the pendulum between a cash-only and cashless society is swinging steadily toward cashless. Despite the benefits for a restaurant in an all-cash world, we’re more likely these days to pay with credit cards, Apple Pay, PayPal, Venmo, Google Wallet, Chase QuickPay, Square or anyone of a dozen online and mobile payment forms.
I remember just a decade ago one of my smart-alec friends used to ask store clerks, “Do you accept cash?” — just to get a rise out of the checkout clerk. With the swift evolution of technology and ubiquity of plastic and electronic transfers, however, that question becomes less goofy every year.
Airlines first began refusing cash in favor of plastic in 2009, for both convenience and safety. Flight attendants presumably save time and hassle by not fishing around for exact change for our snack boxes and in-flight headphones.
Credit card companies have a clear vested interest in the payments war between cash and credit. Card companies like Visa, MasterCard and American Express charge venders hefty fees on transactions while charging consumers high rates of interest if we carry a monthly balance.
Earlier this month, Visa launched a direct assault on the use of cash, offering some restaurants a $10,000 incentive to go cashless. The restaurants in this trial only qualify for the $10,000 payment if they refuse to accept cash from customers.
A business accepting credit cards pays an average of 2 percent in fees for credit card payments — an expensive proposition — in addition to losing the flexibility of avoiding the tax man by reporting lower sales. Maybe $10,000 will be enough of an incentive from Visa to overcome these hurdles? Somehow I doubt that would be enough to entice my favorite pancake place in Gatlinburg.
While credit card companies have a clear stake in the move toward a cashless society, so do governments. The government of India last November instituted a sudden assault on cash transactions, specifically trying to combat tax evasion and money laundering, by banning the use of high-denomination bills, which included the 500 rupee and 1,000 rupee bills.
People and businesses who trafficked in bills with a face value at and above 500 rupees, or $7.70 U.S., most probably are doing it to underreport income or to engage in illegal business, according to the government’s theory.
The war on cash quickly hurt the Indian economy, and by June 2017 the government began to reissue and authorize larger cash denominations.
In the U.S., the government phased out high-denomination bills of $500, $1,000, $5,000 and $10,000 back in 1969, as they realized these bills were rarely used, except by tax evaders and criminals. Last year prominent Harvard economist Kenneth Rogoff urged banishing the $100 bill in his book “The Curse of Cash,” saying it was most useful to criminals.
Despite Rogoff ’s encouragements, cash seems unlikely to go away anytime soon. It’s still just too darn convenient. I’m sympathetic to the idea that where you fall on the cash vs. cashless spectrum of preference might have something to do with how much you want to hide from the government.
On the other hand, a certain type of skeptic believes the move to cashless transactions foretells a more authoritarian society, one less free from the prying eyes of big government in league with big banks. The War on Cash, in that alternative view, is really a War on Privacy. They have a point as well.
As for myself, of course I use electronic transfer services, credit and debit cards, and have happily experimented with money-transfer mobile payment apps. For small in-person payments, I tend to pay for everything with $2 bills, $1 coins and Kennedy half-dollars, just to mess with merchants.