Taxing The Poor

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Most of America’s remaining tariffs are particularly taxing on lower income citizens. Although U.S. tariffs are on average relatively low, theyare particularly high on products like shoes, clothing, and food—necessities on which lower-income Americans spend a higher proportion of their incomes and that are produced disproportionately by workers and farmersin poorer countries. A 2007 book by Edward Gresser of the Progressive Policy Institute points out that hotel maids who earn $15,000 per year probably pay the equivalent of a week’s pay in tariffs annually, whereas hotel managers, because of the goods they buy as well as their higher incomes, probably lose only a few hours’ pay in tariffs each year. The benefits of free trade—lower prices, greater choice, and better quality goods—are precisely what every lawmaker interested in improving the lives of America’s less fortunate should welcome.

The Cato Handbook

Make no mistake – tariffs are a tax on consumers and we currently do a great job of taxing the poor. There are several pending trade treaties that would make life easier for the poor, but the White House has been unwilling to submit the treaties for ratification and Congressional support is questionable. The reality is that many voters are ignorant of economics and don’t realize what a boon free trade would be for fighting poverty. Thus, helping the poor through free trade is not very popular – and politicians know it! Every now and then a bold politician gets it right (thank you, Bill Clinton), but that’s a rare event. Generally, voters, including poor voters, support taxing the poor in the most regressive way possible.


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