KEYC - Mankato News, Weather, Sports - - Clothing Tax On Table for Lawmakers Balancing Budget

Clothing Tax On Table for Lawmakers Balancing Budget

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MANKATO, Minn. -

Among the shoppers that flock to the River hills mall in search of the perfect outfit or pair of shoes, are thousands of Iowans looking to pay a little less than they would at home.

General Manager Paul Wilke says, "We figure an estimated 850,000 people from Iowa cross the border to come and shop in Mankato every year."

Minnesota is one of only 10 states that doesn't tax clothing. It's a policy that is celebrated by shoppers who want the most for their dollar, and places like River Hills Mall where Wilke says it gives the shopping center a big advantage.

Wilke says, "They have a 7% tax in Iowa obviously brings them this direction when they go shopping more frequently than if we did have a tax, no doubt."

But this advantage comes with a cost: the state estimates that it loses out on more than $300 million a year in tax revenue.

That could soon change though under current budget proposals at the capital to tax garments.

The Senate Democrats plan would reduce the state sales tax more than a percentage point and tax clothing and other goods and services.

Wilke says, "I think there is a way to make this work without being regressive and stopping people from shopping to get necessities such as clothing."

Wilke says he understands the need to balance the budget, but sees big benefits to not taxing clothing.

Wilke says, "It's obviously a great advantage for us, probably even bigger to the Twin Cities with mall of America being a tourist destination, they would get hit a lot worse than we would."

Under the Senate's plan, low-income Minnesotans would get a credit of up to $60 to offset the new clothing tax.