No (shoe) Taxation Without Representation!

[Ben]

Saw this article this morning and was kinda blown away. I had no idea some clothing items like shoes had import taxes to the tune of 70%!


http://money.aol.com/news/articles/_a/shoe-industry-wants-to-boot-import-tax/20071213112109990001
From the article:

Trade associations and their members, such as Payless ShoeSource, Nike Inc., and Columbia Sportswear Co., have been lobbying U.S. lawmakers weekly since the summer to get them to exempt certain categories of footwear - including all children's shoes - from the import tariffs that can run as high as 67.5 percent a pair.

The groups created a Web site- EndtheShoeTax.org -- to raise awareness and encourage constituents to tell their lawmakers, via an e-mail prompt on the site, to pass the Affordable Footwear Act of 2007.

While the matter appears to have widespread industry support, its relative obscurity and low-level priority make passage of the bill anything but a shoe-in, several supporters say.

Imposed in the 1930s, the tariffs were designed to protect a domestic manufacturing industry from cheap imports. But that industry has largely disappeared over the past 20 years, as manufacturing overseas has become easier and cheaper.

[HankB]

If the shoe tax were to be repealed, you would NOT see discount places lower their prices on the no-name shoes they sell - they would simply pocket the difference on the already-cheap stuff they sell.

Name brand suppliers and manufacturers would raise their prices to their customers to largely compensate for the drop in taxes.

IMHO they can, and do, engage in price-fixing without leaving an overt trail of communications or a record of meetings that a prosecutor could use.

[Paddy]

Prices won't come down if you remove the tax.  That money will just drop to the bottom line as more profit.

[Tallpine]

So this means that Walmart "shoes" must cost about $0.02 to produce ?

That makes sense ... 

[Nick1911]

So this means that Walmart "shoes" must cost about $0.02 to produce ?

Cost of production * 1.[taxes] + profit margin = cost

Cost of production * 1.67 + profit margin = $20

Cost of production + profit margin = $11.97

I'd guess more like $10 to produce and ship.  I'd like to see the actual figures though!

-Nick

[geronimotwo]

IMHO they can, and do, engage in price-fixing without leaving an overt trail of communications or a record of meetings that a prosecutor could use.

they engage in price gouging because we allow it by buying their products.

[Brad Johnson]

they engage in price gouging selling a product for as much as they can because we allow it by buying are a bunch of two-faced rubes who scream about overseas production and unfair competition but will not hesitate to trample each other in order to save a few pennies buying their products.

There, fixed it for you.

Brad

[Paddy]

Brad beat me to it.

[AZRedhawk44]

I've got two words:

New Balance.

Last I checked, these shoes are 100% american made, cheaper than nikes or reeboks, and frankly, they fit me better.  Not being imported, they are not subject to a 67% tax.

We're talking 67% on a pair of shoes that have a declared import value of about $7, whether they are designer nike's or walmart/wrangler boots that cost $19.94.

[Perd Hapley]

Prices won't come down if you remove the tax.  That money will just drop to the bottom line as more profit.

Won't they profit more by lowering prices beneath those of their competitors? 

[Brad Johnson]

Prices won't come down if you remove the tax.  That money will just drop to the bottom line as more profit.

Won't they profit more by lowering prices beneath those of their competitors? 

Yes

Brad

[Paddy]

Prices won't come down if you remove the tax.  That money will just drop to the bottom line as more profit.

Won't they profit more by lowering prices beneath those of their competitors? 

As in 'we lose money on every deal but we make it up in volume'? 

Not necessarily, because all sales are not solely price driven.  If they were, Nike, etc. wouldn't be in business.   So, simply lowering price won't automatically increase sales and profits.