Some St. Thomas students are upset because the commodity they like to splurge on most may be increasing 10 percent in price within the next few months.
“I’m not happy about it,” freshman David Yordi said. “I will definitely buy less new clothes if the prices go up. College students don’t have a lot of money to spend on clothes in general.”
In recent months, there has been news of possible sales tax increases and increases in clothing prices in the U.S. and in Minnesota. One proposal calls for a clothing tax in Minnesota. Clothing is currently exempt from the Minnesota sales tax of 6.875 percent, according to the Minnesota Department of Revenue.
Some of the reasons behind the increasing clothing prices nationwide include harsh weather around the world that has damaged harvests in many countries, and growth in developing countries that raises demand for a wide range of commodities.
Sophomore Chelesa Cierzan said a major reason she started working at the Mall of America was to receive an employee discount on clothes. She said she enjoys shopping but knows her spending priorities have changed since she started college.
“I have to pay rent and support my sister now,” she said. “I used to shop and spend a lot more money on clothes before, because I didn’t have the bills and responsibilities I do now.”
Why prices might increase
The price of cotton has doubled within the past year as the price of synthetic fabrics has jumped about 50 percent. This has forced some clothing manufacturers and retailers to boost prices to compensate for the increased cost of cotton.
“I love to shop, but saving and spending is definitely something that I, and a lot of my friends, worry about,” Cierzan said.
Cierzan said it has become such a concern that many of her friends want to learn about the economy, about money management and about how they can be financially successful in a consumer-driven economy.
“A lot of my friends have switched their major to economics to learn strategies,” she said.
A possible sales tax on clothes?
In order to decrease Minnesota’s $6.2 billion deficit gap, a proposal was introduced in January aimed at raising sales tax.
Freshman Kylie Zawada, who said she doesn’t buy a lot of clothes on a regular basis, said, “[The sales tax increase] would probably not change my spending habits.”
A Mall of America study found that 40 percent of Minnesotans and 30 percent of non-residents said they’d buy less if apparel was taxed. The lack of a sales tax was one of the top three reasons, behind safety and store selection, that shoppers chose the Mall of America specifically, and Minnesota in general, as a shopping destination.
St. Thomas economics professor Matthew Kim said he thinks about this topic from an economic standpoint. If Minnesota broadens the tax burden on a wider range of commodities, then it can lower the overall tax rate, Kim said. He said this is difficult because economists want to see the state’s deficit lowered while affecting the least amount of people.
No matter the government’s decision, Kim said, it will take a while to notice the outcome of higher prices and of adding a visible clothing sales tax in Minnesota.
Ariel Kendall can be reached at akendall@stthomas.edu.
My young college friends: If you buy into the proposal that we need a tax on clothing to reduce the overspent state deficit, you are just the niave people they want to pay that tax increase. We do not need increased taxes on anything in our economy, but the legislators to be honest and cut the spending and live within the state’s means. We got a deficit by them spending too much of our money – always more than they take in with our already too high taxes. (Minnesota is one of the highest taxed states in the union). Call your legislator and tell them to stop their spending. And as far as Mr. Kim’s statement that with additional taxes on clothes, they will lower the overall tax rate, he too is niave. They never lower the tax rate nor do away with a new tax. Taxes never go down, they always go up and are put on additional items so that legislators can spend more of our money. They will continue to do it if we let them. Tell them to stop spending. They are spending your future incomes.
Mr. Houck, Mr. Kim is not saying that it will or it should. He is simply saying that it can. This could mean that lowering the overall tax rate could be a valuable compromise that Republicans could go for, even though it does raise some taxes. Also, if you are so adamant about no taxes, where can we account for five billion dollars in our state deficit? This is no small sum and to right off the bat rule out all tax increases is what is destroying our political process. Republicans say no to X, Y, and Z while Democrats say no to 1, 2, and 3. There is nothing left then. We need to take a look at all options and then decide. Also, you say that “they never lower the tax rate nor do away with a new tax.” I am puzzled by this. Do you know who our last governor was? I would suggest reading up on legislation from the Pawlenty years. Also, today there are many bills in the state that are aimed towards tax cuts, like one that is 200 million dollars of business tax breaks.
My final point is on the point that the lack of tax on clothes makes “shoppers chose the Mall of America specifically, and Minnesota in general, as a shopping destination.” I am also very skeptical on this. Do you really think that people from around the country fly/drive to MN just to avoid paying taxes on…