Thursday, May 28, 2015

Tariffs drive up the cost of goods to poor people

See Free Trade Is Good for Poor People by Simon Lester of Cato. Excerpt: 
"Should a movie star’s maid pay higher sales taxes than her famous boss?

The truth is, she often does. She just doesn’t know it.

Low-income moms buying polyester shirts, plastic purses, and cheap canvas sneakers are unwittingly taxed five, ten, and sometimes even 30 times higher than movie stars shopping for silks, cashmeres, and snakeskin on Rodeo Drive. This is the hidden scandal of the American tariff system—a small and almost forgotten tax, which likely costs low-income families nearly $2 billion a year.

Because the tariff system raises most of its money from cheaper shoes and clothes, its tilt against the poor is especially steep—much steeper than that of any other federal tax. Each year, single-parent families spend about $13 billion buying clothes, shoes, and other home goods. Tariffs drive up the cost of these goods by about 15 percent, adding about $1.6 billion to the total bill."

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