In a post yesterday, my Cato colleague Chris Edwards graphically demonstrated that the U.S. tax code is very “progressive,” imposing far higher effective rates on high‐income households than on lower‐income households. But one area of federal taxation—the U.S. import tariff code—is actually quite regressive.
Even after decades of trade liberalization, some of the highest remaining U.S. tariffs are imposed on imported goods that loom largest in the budgets of low‐income families—namely the staple items of food, clothing, and shoes. And the highest tariffs within the categories of shoes and clothing are imposed on the lower‐priced varieties that poor families would be most likely to buy.
That is all the more reason to feel good about a movement under way to “end the shoe tax.” According to a story in today’s Chicago Tribune:
Footwear manufacturers and retailers are trying to end a Depression‐era federal shoe tax, a move they say could save American consumers hundreds of millions of dollars annually and kick‐start relatively flat footwear sales.
Trade associations and their members, such as Payless ShoeSource, Nike Inc. and Columbia Sportswear Co., have been lobbying U.S. lawmakers weekly since the summer to get them to exempt certain categories of footwear, including all children’s shoes, from the import tariffs that can run as high as 67.5 percent a pair.
The groups created a Web site, EndtheShoeTax.org, to raise awareness and encourage constituents to tell their lawmakers to pass the Affordable Footwear Act of 2007.
Repealing the shoe tax would have minimal impact on employment. According to the story, 99 percent of shoes sold in the United States are imported. Americans stopped making low‐end shoes years ago. And even if jobs were at stake, it would not justify a cruel tax on such a basic necessity. (The same logic applies to remaining tariffs on t‐shirts, as I explained in a recent op‐ed.)
The political irony here is that many of the same people who complain the loudest that the rich are not paying their “fair share” of income taxes are the first to oppose any lowering of regressive trade barriers that make it more difficult for poor parents to feed and clothe their children.