Most people agree that saltwater taffy was first popularized at Fralinger's, a shop on the Atlantic City boardwalk, around 1883. It was never actually made with saltwater, though the recipe does call for some salt. According to the New York Times, the name may simply refer to the boardwalk's proximity to the sea.
Liberally grease a large baking sheet with butter and set aside.
In a medium saucepan, combine the sugar and cornstarch. Add the corn syrup, water, butter, and salt and stir over medium heat until the butter melts and the mixture comes to a boil.
Cook, without stirring, until the mixture just reaches 250°; on a candy thermometer, or until a small piece dropped into a cup of cold water forms a firm, but not sticky, ball. Immediately remove from heat and stir in the flavor, vanilla, and several drops of food coloring.
Pour the mixture onto the greased baking sheet and let it cool until you're able to handle it, about 15 minutes.
Grease your hands with butter, then pull and stretch the taffy until it lightens in color, about 15 minutes total. Form into ropes and cut into pieces with buttered scissors. Wrap the pieces in squares of parchment or wax paper.