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InflowANNOUNCED AS TEMPORARY
NoNON-TRADE-RELATED RATIONALE
NoELIGIBLE FIRMS
allJUMBO
NoTARIFF PEAK
NoOn 12 July 2009, the Unemployment Compensation Extension Act was introduced to the U.S. House of Representatives, which attempted to include in the wide-ranging tax bill a measure that would tax imported clothing in order to fund benefits that are granted to U.S. apparel manufacturers. The provision was removed from the bill before it was enacted into law.
The measure under consideration was part of the 'American Jobs and Closing Tax Loopholes Act' (H.R.4213 as amended). The package of tax credits, revenue offsets, and the like included a provision (section 617) that read in relevant part as follows:
'T'he Secretary of the Treasury shall transfer to the Wool Apparel Manufacturers Trust Fund, out of the general fund of the Treasury of the United States, amounts determined by the Secretary of the Treasury to be equivalent to amounts received in the general fund that are attributable to the duty received on articles classified under chapter 62 of the Harmonized Tariff Schedule of the United States...
Chapter 62 of the Harmonized Tariff Schedule includes wool suits as well as numerous other articles of clothing, including ski jackets, cotton blouses and shirts, and other non-wool apparel. The tariffs imposed on these goods are among the highest in the U.S. schedule, typically in the range of 15-17%. The bill now under consideration would not raise those tariffs, but would earmark the revenues that they raise for the benefit of the U.S. industry.
The provision was sponsored by Representative Louise Slaughter (Democrat of New York), whose district is home to Hickey Freeman (a men's suit manufacturer). Representative Kevin Brady (Republican of Texas), who is the most senior Republican on the Trade Subcommittee of the House Ways and Means Committee (the committee of jurisdiction for this bill), objected strenuously to the provision. He characterized it as a 'revenue grab' and stated that
By turning our tariff program effectively into a welfare program, you've opened the door to all sorts of problems in the future. To simply try to sweep in more duties, unrelated duties, to cover a shortfall for that ... opens up the whole tariff schedule for being raided for whatever slush fund thinks they need more money. I think it's an awful precedent.
The final bill was drafted by the Democratic chairs of the House Ways and Means Committee and its Senate counterpart, the Finance Committee.
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