Thoughts, essays, and writings on Liberty. Written by the heirs of Patrick Henry.

“The welfare state is not really about the welfare of the masses. It is about the egos of the elites.”     Thomas Sowell

December 14, 2007

Repeal The Shoe Tax !

by Doug Mataconis

Shoe manufacturers and retailers are lobbying Congress to repeal a seventy year old tariff that has outlived it’s usefulness:

WASHINGTON – 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.

(…)

Imposed in the 1930s, the tariffs were designed to protect a domestic manufacturing industry from cheap imports. But that industry has largely disappeared over the past 20 years, as manufacturing overseas has become easier and cheaper.

(…)

Of the 2.4 billion pairs of shoes Americans bought in 2006, nearly 99 percent were made overseas, mostly in China, according to the American Apparel & Footwear Association.

U.S. shoe tariffs are among the highest in the world, compared with the European Union’s 17 percent, Japan’s 10 percent or Chile’s 6 percent duties, according to the centrist Progressive Policy Institute.

So basically what’s happening is that the price you’re paying for shoes if you live in the United States is artificially high because of a tariff imposed in the 1930s to protect an industry that, for the most part, doesn’t even exist anymore.

This story also illustrates a point — import barriers are really just a tax on American consumers because, to a large degree, the cost of the tariff will be built into the retail price. This is especially true in the case of shoes where the market is almost totally dominated by foreign manufacturers so there is limited price competition from American companies. It is a tax on the poor and middle class.

So where are the nativist trade protectionists on this one ?

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3 Comments

  1. This is just government taxation. We’re paying 67.5% so the government can take its pound of flesh from us.

    And to think, if we would repeal these tariffs, we’d be able to have cheaper shoes and be bleeding heart enough to pay those poor children and poor laborers in third world countries more for their work. HA HA HA. Impossible. ’cause that would be genuinely helping poor people, and that has to be illegal.

    Comment by TanGeng — December 14, 2007 @ 9:47 am
  2. The worst part about this tax is that it is: 1) hidden (imagine if you saw this on your receipt; you would flip your lid) and (2) taxed several times over (triple dipping for the U.S. Govt…shoes are taxed upon entry, we pay the sales tax on the final product and then the corporation is taxed off of their profits which came from a tax).

    In general, subsidies suck. They “protect” few while raising the prices one American consumers and businesses alike (see steel industry and what they have done to the automobile industry).

    Comment by Drew — December 17, 2007 @ 7:13 pm
  3. Drew

    You missed one more tax that gov’t gets from this: the dividend tax. When the corporation sends a dividend check to its owners from the profits the stockholders pay a tax on that dividend even though it was already taxed at the corporate level.

    Comment by TerryP — December 18, 2007 @ 7:26 am

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