ACT urges lawmakers to abandon ‘double taxation’ of second-hand goods

Buying second-hand clothing is seen as a safe way to reduce textile waste and make a real contribution to combating the climate crisis. But in doing so, American consumers pay twice as much in taxes.

Some consider this double taxation to be an unfair and now obsolete “double drain” on consumers’ pockets.

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American Circular Textiles (ACT), in partnership with a coalition of more than 30 members, has launched a national petition to end double taxation on second-hand goods, repairs, and alterations. The call has received more than 300 signatures to date, with support from Fashionphile, ThredUp, Vestiaire Collective, and others, according to the Action Network petition.

“Consumers’ wallets are strapped for cash. Monthly spending on clothing and footwear has increased by 72% since January 2020, and more and more consumers are turning to second-hand clothing,” said Rachel Kibbe, founder and CEO of the group. “Ending double taxation is not only the right and fair thing to do, it will also boost economic growth and reinforce the trend towards buying good quality clothing that can be reused and/or repaired rather than thrown into the ever-growing piles of clothing waste.”

Many U.S. states impose sales taxes on second-hand items, including clothing, shoes, and accessories. This results in a form of double taxation, as consumers are taxed both when they initially purchase the item and when they purchase it through resale channels.

“Unspun is proud to support the national petition to eliminate double taxation on used goods,” said Beth Esponnette, co-founder and CEO of the company. “This is a critical step that will encourage a shift to an economy that values ​​reuse and repair, benefiting both consumers and the environment.”

Furthermore, according to ACT, this policy not only discourages sustainable purchasing practices, but “stifles the growth” of the second-hand market and the circular economy. The report “Stop Secondhand Clothing from Being Taxed Twice” describes the other “harmful effects” of double taxation and urges lawmakers to take action.

“Ending double taxation will save consumers money and support American businesses,” the petition reads. “As much as 85 percent of discarded textiles end up in landfills, with over 17 million tons of textile waste accumulating in the United States.”

According to ThredUp, eliminating double taxation on used goods is simply “smart policy.”

“Not only will this help fuel the circular economy, it’s also a common-sense approach that will empower consumers to make smart, sustainable choices,” said Alon Rotem, general counsel for the online consignment and secondhand retailer. “It’s a clear win for the future of fashion and for taxpayers who want to do the right thing.”

Fashionphile also expressed excitement about joining ACT in the fight to eliminate the second-hand sales tax.

“We believe we can make a compelling case for sustainable purchasing choices if efforts are made to alleviate the financial strain these taxes place on consumers,” said Nora M. Cummings, vice president of retail and impact at Fashionphile. “Together, we’re not just standing up for fashion; we’re standing up for a greener, more accessible future for all.”

Vestiaire Collective, for its part, highlighted the crucial role that second-hand sales platforms play in removing obstacles for circular businesses.

“Fair tax policies strengthen the viability of second-hand markets, which benefits both the environment and the economy,” said Samina Virk, North American CEO of B Corp. “Additionally, this campaign is part of our advocacy efforts in France and Europe for new VAT policies to support circular business models.”

The petition calls on citizens to write to lawmakers and urge them to consider closing this loophole for four reasons: to support the circular economy and sustainability goals, but also to provide economic relief to consumers, support local businesses, and align with broader policy goals.

“Eliminating these taxes is part of broader legislative goals to promote sustainability, support small businesses, and reduce economic inequality,” the pre-drafted argument reads. “It also complements other efforts to encourage circular economy practices, such as developing regulations like Extended Producer Responsibility, which will require businesses to reuse and recycle what they sell in the United States. This is a common-sense step toward a more sustainable and equitable future.”