What's Wrong with a Sales Tax on Clothing?
by Leigh Pomeroy
Minnesotans are stubborn lot. They don't take to change well. That's why if you were to suggest that one option for recovering some of the state's lost revenue over the past six years is to charge sales tax on clothing, you'd probably get just one reaction:
"Horrors!"
Tax increases of any type don't sit well with most folks. And they're correct to be skeptical. But the ones who often yell loudest about tax increases are those who have benefited most from taxes paid by citizens in the past.
If you're a businessman and you rely on an intelligent workforce, you can thank public schools; if you rely on trucks to get supplies to your factory and products to market, you can be thankful for public roads; if you take for granted a stable economic system, you can thank state and federal regulatory laws; if you can assume your factory is not going to be broken into and everything stolen, you can thank the public police force.
In short, so much of what we take for granted today was paid for by generations prior to ours in the form of taxes. What right does anyone have to say that this generation of taxpayers should not do the same for the next?
One tax that has proven to be effective in 45 of our 50 states is the sales tax. It works on a very simple premise: The more you buy, the more you pay. Yes, it can be regressive and a burden on those at the lower end of the economic scale. That's why sales taxes have to be employed with caution. And that's one reason why in Minnesota there are no sales taxes on certain "basic necessities," including home heating fuels, prescription drugs, some medical devices, food and clothing.
But clothing? How many of the clothes we buy today are "basic necessities"?
Exempting clothing from sales tax at one time made sense when most Minnesotans had to scrape to come up with enough money for a winter coat. It also made sense when virtually all clothing worn by Americans was made from American cotton, wool and leather, and stitched together by American workers.
But today most clothing comes from overseas. And while it's very nice of us to support clothing manufacturers in Central America, China, southeast Asia, India and eastern Europe, should we do so by giving those imported goods such a significant tax break? I don't think so.
Minnesota in the minority
As far as sales tax on clothing goes, Minnesota is in the minority. According to Minnesota House Research, only 10 states do not charge sales tax on clothing, and of those half do not charge any sales tax at all. The only states that charge sales tax but exempt clothing are, besides Minnesota, Massachusetts, New Jersey, Pennsylvania and Rhode Island, all of which had thriving clothing manufacturing industries prior to globalization.
And yet in Minnesota sales tax on clothing isn't even on the discussion table.
Gov. Pawlenty, of course, opposes any kind of tax increase anywhere. He seems to think that the state, counties, cities, townships and school districts all run on air. And he's got supporters in the legislature.
One particularly humorous recent example is when Rep. Tony Cornish, R-Good Thunder, a notorious taxophobe, wanted the state to pony up earmarked funds to help schools in his district. Some folks are good at taking, but giving? Oh no, not me.
Still, apart from what the governor thinks, there isn't even a whiff of a bill pending in the DFL-controlled state legislature about applying sales tax to clothing. Similarly, at Minnesota Public Radio's Budget Balancer, over 70 percent of the survey's respondents say sales taxes should remain unchanged, implying strongly that they're not crazy about tax on clothing either.
At one time clothing was considered like food and housing to be a necessity. And yes, it's still a necessity unless we all want to run around naked. Even with global warming, Minnesota is still projected to be cold during the winter.
But let's face it, for most Minnesotans clothing is more about style than it is about staying warm. And to me, style is a luxury, something that's optional. That's why applying the sales tax to clothing makes a whole lot of sense.
So just imagine what we could do with a sales tax on clothing: We could help a whole lot of Minnesotans who need health care, for instance, thanks to other Minnesotans paying an extra $5 on a new pair of $80 designer jeans.
Minnesotans are stubborn lot. They don't take to change well. That's why if you were to suggest that one option for recovering some of the state's lost revenue over the past six years is to charge sales tax on clothing, you'd probably get just one reaction:
"Horrors!"
Tax increases of any type don't sit well with most folks. And they're correct to be skeptical. But the ones who often yell loudest about tax increases are those who have benefited most from taxes paid by citizens in the past.
If you're a businessman and you rely on an intelligent workforce, you can thank public schools; if you rely on trucks to get supplies to your factory and products to market, you can be thankful for public roads; if you take for granted a stable economic system, you can thank state and federal regulatory laws; if you can assume your factory is not going to be broken into and everything stolen, you can thank the public police force.
In short, so much of what we take for granted today was paid for by generations prior to ours in the form of taxes. What right does anyone have to say that this generation of taxpayers should not do the same for the next?
One tax that has proven to be effective in 45 of our 50 states is the sales tax. It works on a very simple premise: The more you buy, the more you pay. Yes, it can be regressive and a burden on those at the lower end of the economic scale. That's why sales taxes have to be employed with caution. And that's one reason why in Minnesota there are no sales taxes on certain "basic necessities," including home heating fuels, prescription drugs, some medical devices, food and clothing.
But clothing? How many of the clothes we buy today are "basic necessities"?
Exempting clothing from sales tax at one time made sense when most Minnesotans had to scrape to come up with enough money for a winter coat. It also made sense when virtually all clothing worn by Americans was made from American cotton, wool and leather, and stitched together by American workers.
But today most clothing comes from overseas. And while it's very nice of us to support clothing manufacturers in Central America, China, southeast Asia, India and eastern Europe, should we do so by giving those imported goods such a significant tax break? I don't think so.
Minnesota in the minority
As far as sales tax on clothing goes, Minnesota is in the minority. According to Minnesota House Research, only 10 states do not charge sales tax on clothing, and of those half do not charge any sales tax at all. The only states that charge sales tax but exempt clothing are, besides Minnesota, Massachusetts, New Jersey, Pennsylvania and Rhode Island, all of which had thriving clothing manufacturing industries prior to globalization.
And yet in Minnesota sales tax on clothing isn't even on the discussion table.
Gov. Pawlenty, of course, opposes any kind of tax increase anywhere. He seems to think that the state, counties, cities, townships and school districts all run on air. And he's got supporters in the legislature.
One particularly humorous recent example is when Rep. Tony Cornish, R-Good Thunder, a notorious taxophobe, wanted the state to pony up earmarked funds to help schools in his district. Some folks are good at taking, but giving? Oh no, not me.
Still, apart from what the governor thinks, there isn't even a whiff of a bill pending in the DFL-controlled state legislature about applying sales tax to clothing. Similarly, at Minnesota Public Radio's Budget Balancer, over 70 percent of the survey's respondents say sales taxes should remain unchanged, implying strongly that they're not crazy about tax on clothing either.
At one time clothing was considered like food and housing to be a necessity. And yes, it's still a necessity unless we all want to run around naked. Even with global warming, Minnesota is still projected to be cold during the winter.
But let's face it, for most Minnesotans clothing is more about style than it is about staying warm. And to me, style is a luxury, something that's optional. That's why applying the sales tax to clothing makes a whole lot of sense.
So just imagine what we could do with a sales tax on clothing: We could help a whole lot of Minnesotans who need health care, for instance, thanks to other Minnesotans paying an extra $5 on a new pair of $80 designer jeans.
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1 Comments:
This opinion is laughable on so many levels I can't even think of where to begin! Not because I don't agree with taxing clothing but because of the disjointed hyperbole in the opinion. Mr Cornish is a 'taxophobe'. Mr Pawlenty thinks local government runs on air. Our livelihood today is based on taxes paid in the past. Business can thank schools for an intelligent workforce. There are many companies stuggling to find talent - mine included - because so many people want to be teachers or lawyers or social workers or just rode the self-esteem ciricumlum without learn anything worthwhile enough to be useful for 21st century jobs.
But, beyond these drawbacks, the opinion asks should we tax clothing? Well, why not?! The legislature is on a tax increase rampage already I am sure there is some DLFer at the legislature who would be sympathetic to this tax. To date, the DFL legislature has proposed the following tax increases:
House File 1463 - raise sales tax for transit and other purposes
House File 1449 - raise sales tax $500 million for parks, trails and habitat projects
House File 1112 - raise metro sales tax for transit
House File 1469 - raise fuel taxes 50% on gas, E85, M85, liquid petroleum, propane, liquid natural gas and compressed natural gas
House File 946 - raise gas taxes
%50 and allow counties to levy wheelage taxes as well as transportation-impact fees on building permits and raise car tab fees
House File 939 - raise transfer-of-property fees by 50%
House File 362, 1042 & 1466 - higher taxes on local deeds and mortgage documents
Rep Hortman (DFL - Brooklyn Park) proposes $.05/gallon increase on paint
House File 213 - raise taxes on cemetery plots
House File 946 - triple the tax on renting a hearse for coffin transport.
House File 1050 - raise $110 million by raising liquor taxes:
distilled spirits - increase 228%
wine - increase 450%
hard cider - increase 800%
regular beer - increase 790%
3.2 beer - increase 457%
House File 1027 - tax cosmetic surgery becoming the first sales tax on a service in Minnesota history (Minnesota sales taxes have been only on goods) opening the door for a panopoly of new taxes in the future
House File 1212 - here's a doozy!
place a 10% tax on monetary gifts from one person to the other. If the donor does not pay the tax, the tax burden shifts to the person who received the gift. Not paying the tax subjects you to a $100 fine.
House File 1464 - telecommunications tax increases of 46% on all land and mobile phone service.
House File 161 - raise fees for county and regional jails
House File 854 - raise sales taxes on electronic video equipment
House File 1722 - raise annual pharmacy fees.
House File 1738 - raise income taxes by $252 million.
House File 1258 - raise income taxes on highest 170,000 households
Senate Tax Bill - raise income taxes by $1 billion across all tax brackets.
well, might as well add one more since we are such an undertaxed state!
House File 999 - raise sales tax on a pair of designer jeans (I suppose even Dickies, Levis, Gap and even Sears Toughskins would be considered 'designer jeans' in this bill!) $5.
Oh, and we're not even close to being done at the Legislature for 2007. There are a phalanx of tax bills that have not even come out of committee yet. It's only mid-April 13 and your DFL legislature has lots of time to come up with ways to tax us - and not just the 'rich'. We're ALL targets of the DFL tax steamroller.
Me? I'm one of the 'taxophobes' Mr Pomeroy doesn't care for. I'll continually put in efforts to eschew paying taxes whether it means simply not purchasing a high-taxed item or use the internet to avoid purchasing items without paying taxes.
What many people don't realize is that tax policy has consequences. Putting taxes on clothing means people will buy less clothes in Minnesota. They'll go elsewhere to buy clothes. I know people in Chicago drive to the Mall of America to purchase clothes once a year because of the high tax on clothes in Illinois. But, the failing philosophy is to think people don't change their habits because of tax changes. They do! And when the revenues from these proposed taxes don't create the expected numbers, income taxes will have to be elsewhere to make up the numbers - that is if there is anyone left who has enough money to pay the taxes.
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