Barely noticed but economically significant, the US Senate has introduced legislation that could profoundly impact the costs of shoes, particularly those produced for children.
The Affordable Footwear Act (S.1633) is sponsored by Senators Claire McCaskill (D-MO), Pat Roberts (R-KS), Jeff Merkley D-OR), Mike Johanns (R-NE), Roy Blunt (R-MO), Maria Cantwell (D-WA), Jerry Moran (R-KS) and Amy Klobuchar (D-MN).
The main purpose of the bill is to assist low income families struggling to purchase affordable shoes due to what many argue is an inordinately high import duty, which can reach 65% in some instances. Compare this to the average import tax on consumer good in general: 1.4%. Since more than 98% of all shoes purchased in the US are imported, it’s all but impossible to avoid what some consider to be a hidden tax.
Kevin Burke, the CEO of the American Apparel and Footwear Association, expressed enthusiasm about the bill. He said,”If there was ever an opportunity for Washington to improve its public image with the American people, the Affordable Footwear Act is it. The Senate and House now have a valuable opportunity to work together in a bipartisan way and offer hardworking American families a real cost savings at the cash register. Once passed by both chambers and signed into law, the Affordable Footwear Act will eliminate the hidden taxes on low-cost and children’s shoes and create valuable footwear jobs right here in the United States. We will continue working to pass this commonsense legislation as soon as possible.”
In total, if the bill should become a law experts estimate that it would eliminate as much as $800 million in duties on children’s shoes, a considerable chunk of the $2.3 billion in duties collected overall in 2012 for footwear.
The level of the import tax varies depending on the type of shoe. Leather dress shoes capture a tariff of 8.5%. The average pair of running sneakers usually commands 20%. And since the great majority of these shoes are imported from countries that do not have a free trade agreement with the US, especially China, these duties are unavoidable.
Advocates of the Affordable Footwear Act argue that these inflated duties function as a regressive tax on the poorest families who are disproportionately disadvantaged by them. Combined with state taxes and retail markups, it’s not unusual that a pair of children’s boots, priced at $10 when it arrives at the US border, costs more than $30 at the store.
Also, the same advocates point out that the Affordable Footwear Act will have no negative impact on jobs in the US since nearly all of the shoes covered by the new legislation re manufactured abroad. There are no more than 12,000 shoe manufacturing jobs in the US, a paltry number. American footwear producers tend to focus on very high-end shoes, or focus on design rather than physical production.