The Progressive Policy Institute is right on the money with this week's trade fact: Tariffs are the United States' Most Regressive Tax (Apr 11).
...Alike in the money they raise for government, estate taxes and tariffs are not alike in the people who pay. The estate tax is mainly a tax on wealth, covering only estates above $2 million and (to quote the IRS) "affecting only the wealthiest 2 percent of Americans." The tariff system is mainly a tax on want, raising most of its revenue on life necessities and cheap consumer goods, and affecting poor families with children more than anyone else. Last year, clothes raised about $9 billion of the total $25 billion in tariff revenue, shoes brought in another $2 billion -- nearly as much as cars. Food raised $600 million, mostly from cheese, butter, orange juice, and canned tuna. Cheap household goods, including: towels, forks, spoons, suitcases, drinking glasses, and plates, added about $2 billion more. Altogether, life necessities and mundane consumer products make up about 10 percent of imports but raise about 60 percent of tariff revenue.
These goods are most important in the lives and budgets of poor families with children. The Bureau of Labor Statistics' Consumer Expenditure surveys show that a typical top-ten-percent family spent about 4.4 percent of its pre-tax income on food and clothes (excluding alcohol and restaurant meals) in 2005, and the comparable bill for a single-parent family was 15.8 percent of income. Any flat tariff on shoes and clothes, therefore, would hit single moms about three times as hard as rich families. The actual tariff system is not flat, though, but steeply tilted against poor people, as tariffs are systematically high on cheap products but low on luxury goods. Sterling silver forks, for example, have no tariff while cheap stainless steel forks get 20 percent. A long-sleeved men's silk shirt has a 1.1 percent tariff and its polyester equivalent 25.9 percent; silk brassieres get 2.7 percent, while cotton and polyester bras get 16.9 percent. Shoes, luggage, plates, drinking glasses, skirts, and similar products are just the same. PPI's 2002 article, "Toughest on the Poor: Tariffs, Taxes and the Single Mom," suggests that though the tariff system is the smallest of the main federal taxes, tariffs rank second only to payroll taxes in the lives of single mothers, and likely cost women leaving the welfare system a week's salary each year.
(emphasis added)
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