Why does the 'US MINT' need to make a profit?

I was reading another post, and people were complaining on how the Mint was releasing different coins in different packages in order to make "more money"....

Then it occurred to me.... Why does the Mint need profits in the first place?

I suppose I have lived my life naively thinking that the US mint was a Federal Government run department. With that statement, in my own minds eye, I just supposed that the Federal Government paid for the equipment, materials and salaries for the US Mint.

Am I mistaken?

SO... then I began to think... Ok... let's say what I think of the US Mint is true... the Federal Government DOES pay for all of that....

Maybe the profits from selling the ASE's and such go towards future packaging... that the profits don't go in anyone's pocket (so to say), but rather, those funds are used for future projects and products.

In that case, it only seems logical that eventually, that extra money is going to add up, and there is going to be WAY more money in that fund then even the US Mint can spend...

So where does that money go!??!

 

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Mint's historically have always made a profit on coinage, it's call seigniorage. It's the difference in the price of the metal + the cost of minting (labor + capital costs) subtracted from the face value of the coins. The US mint still does this, hence the change from copper pennies in 1982 to zinc pennies, they were losing money when copper prices rose so they switched. I beieve the US Mint is close to, or fully self-funding.

 

If only the rest of the Federal Government could follow the mint's example...

 

Thanks for writing Beef.... I really appreciate it....

So... then if that is the case, then there is the possibility that there CAN be situations where the Income far out weighs the Output. This would allow for the possibility to create a bit of a 'Slush Fund'.

Who gets it? Where does it go?

And... as for the other thing I was wondering.... Does the Federal Government pay for the Mint in any way? Whether it be Salaries, pensions, equipment or alike?!?

 

If the US Mint were funded strictly from the Federal government then it would be funded through tax dollars or by increasing the national debt. However, by allowing the US Mint to make a profit, the Federal government does not have to fund the operations through tax dollars or debt and when the US Mint is in the black it can help the government's bottom line. I view the surcharges on commems and other collector coins as a voluntary hobby tax that many collectors are willing to pay.

 

If that is true Tom (I'm not doubting.. I just don't know what the truth is).... That makes perfect sense to me! I just don't know if you "Know for Certain"... or if you are just supposing like I did?

 

Governments make sure they DON'T make a profit.

 

The US government budget shows the payment of seignorage from the mint back to the US Treasury account. So, any profit from the mint is returned to the US Treasury. In effect, theoretically this lowers the amount of taxes all Americans need to pay for the government. Its so out of balance now its hard to see that, but I do see the profits being returned to the Treasury. The bigger money maker is the Federal Reserve, which returns hundreds of billions in profits back to the Treasury each year.

 

That's amazing... i had no idea of that to be perfectly honest.

And.. what a way to do it to... What I mean is what a way to raise additional revenue for the Government. Honestly.... like it was pointed out, it's like a "Voluntary Hobby Tax".... which is the truth...

It really is a great idea.... and I'm glad that is what the extra funds go to...

Now if the Federal Government could only get its act together and budget more properly... ugh...

 

That's is historically true, but since the 1990's the mint has made a huge profit off its "collectables". Last year the profit from collectors was more that the profit from seigniorage.

 

They made $93 million last year.

 

It really doesn't seem like a lot of money, when you consider the amount of items the mint turns out in an average year. I have to admit, some of the collectible item the mint sells are a bit overpriced, but we can always opt not to buy that particular item.

 

They use the extra money to pay for the shortfall at the post office. Thus, the reason they use UPS to send coins since it cost money for the post office to send them.

 

There is no shortfall at the post office that was not deliberately created for political reasons.

And my mint orders come by USPS.

 

When you order the big ticket items, such as the one ounce gold proofs, they ship the package UPS and (sometimes) FDX.

 

Political reasons mean "the people or us" don't want to pay the correct postage. I get a lot of stuff from the mint and it is almost always from UPS or Fedex. Why would the government send something from a service that loses them money. If I ran a business to make money, I wouldn't.

 

Not trying to harp, but this is just mistaken. The post office does not "lose them money."

 

No, they just lose money all on their own........

 

What's wrong with the govt using Fedex and UPS? They are American companies.

 

It isn't especially when you consider just a few years ago it was much closer to 500 million. For example in 2011 net revenue was $527.8 million. In 2007 it was $1.08 BILLION. For a long time most of the mints profits came from seigniorage, but that has been dropping and the numismatic and bullion profits have been making up a larger percentage.

Seigniorage
2011 $348 Million 67.3% of total
2012 $105.9 million 50.9% of total
2013 $137.4 million 46.9% of total (This surprised me I was expecting a loss, but higher quarter and dime production allowed them to offset the loss from the cent and five cent.)

Bullion
2011 $65.8 million 11.3% of total
2012 $28.4 million 13.6% of total
2013 $59.3 million 20.3% of total

Numismatic
2011 $113.2 million 21.4%
2012 $73.9 million 35.5%
2013 $95.8 million 32.8%


Currently the Mint is completely self funding. They receive no tax money from the Treasury and instead send money TO the Treasury. Any seigniorage surplus to the treasury reduces the need for taxes or borrowing by that amount. If the Mint ever start losing money on seigniorage then money will have to come from the Treasury for operations and that will increase taxes and borrowing.

The Mint actually did that in 2011. While they had net income of $527.8 million, they only turned over $51 million to the Treasury to keep a reserve fund against income loss from the discontinuance of the dollar coins and increasing losses on the one and five cent pieces. They did the same in 2012 turning over $77 million even though the had net income of $208.2 million. This year they gave some of that back turning over $392 million on income of only $292 million