With the switchover to Democratic control of the Minnesota Legislature, lawmakers have begun looking at options for raising taxes. Part of the discussion involves revamping the tax code, so as to help resolve structural budget problems. Among proposals on the table:?Applying the state sales tax (6.875 percent) to online purchases and expensive apparel.
The high-priced apparel tax is goofy. It would tax clothing sales over $200. So people would tend to chop up their shopping to avoid the tax hike. An opponent of the idea noted that he would be inclined to buy a pair of pants one day, then a suit jacket the next, rather than simply going out and buying a suit. Currently, there is no sales tax on clothing in Minnesota.
Extending the sales tax to Internet purchases seems to make more and more sense over time. Not taxing Internet purchases is unfair, in the extreme, to brick-and-mortar stores within Minnesota that are forced to impose the tax on their customers.
We do not like the idea of extending the sales tax to more transactions without also lowering the tax. In fact, ideally, a sales tax should apply equally to every sale, whether for a good or service. But the tax should be much lower, say half of its current level. This would provide a better revenue stream for the state, but would not represent an undue burden on commerce.
We hope that as lawmakers move ahead with tax reform, they keep in mind the principles of simple, fair, broad and low taxation.