| Tariff system: | $80.3 billion |
| Fuel tax for trust fund: | $42.2 billion |
| Estate and gift tax: | $33.7 billion |
| Tobacco excise tax: | $10.3 billion |
| Alcohol excise tax: | $9.5 billion |
* Office of Management and Budget
Who says Congress has no room for creative thinking? For fresh approaches to tired debates? Or for starting a project by seeking reliable facts and data first? Well, a lot of people might say those sorts of things. But here are Representatives Lizzie Fletcher (D-Texas, and Chair of the New Democrat Coalition’s Trade Task Force) and Brittany Pettersen (D-Colo.), proving them wrong today as they introduce a bill entitled the “Pink Tariff Study Act”. Their bill directs the Treasury Secretary to review the American tariff system — likely for the first time in 70 years — for gender bias, regressivity, and impact on different types of American households. Some background and significance of their idea:
Congress has two “trade policy” powers: (1) to “regulate commerce with foreign nations”, and (2) to “lay and impose Taxes, Duties, Imposts and Excises.” For nearly a century — since the New Deal-era Reciprocal Trade Agreements Act began America’s series of tariff-reducing and trade-opening agreements in 1934 — arguments over trade and trade policy have revolved mainly around imports, export opportunities, and in general the first power. For the first 150 years of U.S. history, though, it was mostly the opposite, with Congressional debates focused on the tariff system’s role as one of the major federal taxes. Though this aspect of tariff policy hasn’t recently got much attention, tariffs remain one of the seven major federal taxes, and are by no means the smallest. The Office of Management and Budget reports that in the last “Fiscal Year” — October 2023 to September 2024 — CBP officers collected over $80 billion in tariff money, nearly as much as their Treasury colleagues got from all the taxes on inheritances, gasoline, liquor, and tobacco put together.
Who exactly is paying this $80 billion? Is the division of payment fair? Has anyone recently looked systematically through the 11,414 tariff lines to see what the rates are? PPI’s work over the past year has done some of this, noting with dismay that the tariff system taxes women’s clothes more heavily than men’s, taxes cheap stainless steel spoons more than sterling silver, and so on. Some academic economists have done similar work — three excellent examples below — and independent modelers have examined Trump-era tariffs on metals and Chinese goods. But Congress and executive branch agencies, whose respective jobs include setting all these thousands of tariff rates and collecting the billions of dollars, haven’t looked in a long time. Congress’ last hearing on this system dates to the early 1970s; the Treasury Department’s last review is of uncertain date but probably during the Eisenhower presidency.
In this sense, the tariff system is like an old tax policy room boarded up decades ago, and not checked since for termites, dry rot, etc. Except that it takes in lots of money: $12 billion on clothes, $3 billion on shoes, $8 billion on electronics, and so on. Extending the metaphor, Reps. Fletcher and Pettersen are asking the Treasury Department to open the windows, air the room out, and look at what’s inside. Their bill is simple, hopefully non-controversial, and intended to seek information on four questions:
* Is the tariff system biased by gender, for example with respect to clothing?
* Is it a regressive tax, falling more heavily on lower-income families than on wealthy households?
* How does the tax burden it imposes fall by gender, household type, and income level?
* Are there other ways in which it might impose unequal taxation?
So: Reps. Fletcher and Pettersen are posing simple and important questions and demonstrating a well-founded concern for fairness and equity in taxation. And as they do, they are answering cynics with an example of Congressional policymaking which based on values, informed by data and analysis, and meant to do some good.
Reps. Fletcher and Pettersen introduce the Pink Tariff Study Act.
And the New Democrat Coalition release explains.
… and for some backstory, the NDC’s Trade Task Force, chaired by Rep. Fletcher, pledges last November to address gender bias and regressivity in the tariff system in their 2023 Trade Agenda.
Tax background:
OMB’s historical tables for spending, tax, and more.
Treasury Department’s Office of Tax Analysis reviews five categories of taxes — income, payroll, corporate income, estate, and a combined “excises and duties” column — for distributional impact.
Tariff system background:
And the U.S. International Trade Commission has the actual, 11,414-line-plus-special-programs U.S. tariff schedule.
PPI’s Elaine Wei and Ed Gresser on the gender bias of U.S. clothing tariffs.
… and the apparently inexplicable, but actually very typical, case of spoon tariffs (with a cameo by Secretary Yellen’s long-ago predecessor, the late Albert Gallatin, explaining in retirement (1833) why tariff systems are more likely than other taxes to evolve toward regressivity).
The University of Wisconsin’s Lydia Cox and Federal Reserve economist Miguel Acosta (February 2024) on the regressivity of tariff policy, its origins, and the potential pro-poor impact of reform.
The ITC’s staff paper (2018) on gender impacts and regressivity.
And Obama-era Council of Economic Advisors eminences Kathryn Russ, Jay Shambaugh, and Jason Furman reach similar conclusions.
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
