What’s Wrong with a Sales Tax on Clothing?

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Minnesotans are a 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 a 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.

Designer jeansIf 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 other than Minnesota that charge sales tax but exempt clothing are 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 funds specifically 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 Minnesota Legislature about applying sales tax to clothing. Similarly, at Minnesota Public Radio’s Budget Balancer, more than 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.