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The Sunlight Foundation Blog
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More on Tax Earmarks and Reform Loopholes
Yesterday the Washington Post reported on 520 tax earmarks that were inserted into a bill that passed the Congress on the last day they were in session. I posited that the inclusion of these tax earmarks without a list of members who requested them was in violation of the earmark reform rule that passed the House back in September. It appears that this was not in violation because many of the tax earmarks were proposed as separate bills earlier in the session and were wrapped up into the final bill. Thanks to Bill Allison I was able to track these bills down.
All of the tax earmarks in the Tax Relief and Health Care Act of 2006 were import tariff suspensions proposed in very specific language to target one or more companies. Any proposed import tariff suspensions are reported to the U.S. International Trade Commission and are posted on their website, which you can access here. This list includes a PDF for each bill that requests an import tariff suspension or a continuation of an import tariff suspension and includes the bill sponsor’s name and the company or companies that requested the tariff break.
Let’s look at one example. Rep. Jim Ryun (R-Ks.) submitted a bill (HR 3491) back in July of 2005 that requested a tariff suspension on “Certain Leather Footwear,” otherwise described as “Footwear with uppers of leather or composition leather, other than for men or women.” The International Trade Commission approved of this tariff on January 30, 2006. This is what part of the USITC form looks like:
Bill No. and sponsor: H.R. 3491 (Mr. Jim Ryun, Kansas).
Proponent name, location: Payless ShoeSource®, Topeka, KS.
Other bills on product (109th Congress only): None.
Nature of bill: Temporary duty suspension through December 31, 2009.
Retroactive effect: None.
Suggested article description(s) for enactment (including appropriate HTS subheading(s)):
9902.64.05 Other footwear with uppers of leather or composition leather, for persons other than men or women (provided for in subheading 6405.10.00)Check one: Same as that in bill as introduced.
X Different from that in bill as introduced (see Technical comments section).
Product information, including uses/applications and source(s) of imports:
The bill covers footwear for children, youths, and boys, with uppers of leather or composition leather
(statistical reporting number 6405.10.0090).Dutiable U.S. imports of the subject footwear totaled about $3.5 million in 2004; trade has fluctuated somewhat in recent years. China was the leading supplier of these imports, followed by Thailand and Ireland.
The form goes on to note contacts that support the measure that were contacted. In this case that includes the proponent, Payless ShoeSource, the American Apparel and Footwear Association, the Footwear Distributors and Retailers of America, and the Rubber and Plastic Footwear Manufacturers Association.
This bill was ultimately included the Tax Relief and Health Care Act of 2006 as were hundreds of other previously proposed import tariff suspension bills. Amazingly these must not be considered “tax earmarks” because they were previously individual bills that were referred to the Ways & Means Committees in both Houses. There in committee they got bundled into another bill to create an omnibus package.
Thus it seems that since the member names were previously reported in each individual bill then they are not considered “tax earmarks” and so the final omnibus bill does not have to issue a report on member earmarks as required by the recently passed earmark reform rule change. Oh the loopholes that our lawmakers jump through!
The problem with these proposals is that when they do pass they do not inform the reader that these were previously individual bills subsumed into the larger bill, thus giving the impression, rightly I believe, that these are tax earmarks. If a real earmark reform proposal is going to make its way through Congress it’s going to have to plug these loopholes that provide no transparency by allowing members of Congress to slip these tariff suspension extensions into bills with a report listing the names and proponents of the suspensions.
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Tax Break Earmarks Continue
What, you thought that Congress had really frozen out all of its earmarks? The Washington Post reports today that one of the final acts of the 109th Congress was to pass a tax bill — the Tax Relief and Health Care Act of 2006 — that included 520 import tariff breaks for select companies. The Post notes, “Corporate lobbyists often craft such suspensions to apply to just one product imported by just one company. Many of those companies and their executives have given millions of dollars to political campaigns.” Of course none of these companies are identified nor do we know who inserted these tax earmarks into the tax bill. All that we have is a very long (and sometimes silly) list that details precisely which items are to be free of import tariffs.
The odd thing about these tax earmarks is that the earmark reform rule change (H. Res. 1000) passed by the House in September stipulates that all tax earmarks be disclosed along with the name of the member of Congress who inserted them. So, either the 109th Congress ended their session by passing a bill that was in violation of the rules or the earmark reform rules they passed were very easy to bypass.
The incoming House Ways & Means Subcommittee on Trade Chairman Sander Levin (D-MI) says that, “The old days of lack of transparency, I think those days have to end.” Levin favors forcing members to put their names on these tax earmarks and disclosing the names of the companies that would benefit.
Below is a list that demonstrates how absurdly specific these tax earmarks get:
- Radiobroadcast receivers capable of operating without an external source of power, not containing a clock or clock timer in the same housing, each containing only an AM radiobroadcast receiver
- Other footwear with uppers of leather or composition leather, for persons other than for men or women
- Footwear with outer soles of leather and uppers of leather, covering the ankle, other than for women
- Footwear with outer soles of leather or composition leather and uppers of textile materials, valued over $2.50 per pair, the foregoing other than for men or women
- Fine animal hair of Kashmir (cashmere) goats
- Marine sextants of metal, designed for use in navigating by celestial bodies
- Electrically operated pencil sharpeners
- Wing illumination lights, designed for use on airplanes
- Grass shears with swiveling heads and with rotating vertical and horizontal cutting blades of steel
- Packages containing 4 or 5 different fireplace tools, such tools of iron or steel, intended for sale to the ultimate consumer in such packages
- Oysters (other than smoked), prepared or preserved
- Boots constructed by hand of natural rubber, the foregoing with steel toes and incorporating ballistic nylon for cut protection, with self-cleaning lug soles or with `caulked' soles for slip and fall protection
- Golf bag bodies made of woven fabrics of nylon or polyester, sewn together with rainhoods, pockets, dividers, and graphite shaft protection
- Camcorders each capable of recording and reproducing video images on mini-DVD media in all the following formats: DVD-R, DVD-RW, DVD-RAM, or DVD+RW, the foregoing each with 25 power optical zoom and a lens diameter of 34 mm
- Hand-held electromechanical can openers, with self-contained electric motor
- Electromechanical knives, with self-contained electric motor
- Electromechanical ice shavers, with self-contained electric motor
- Dual-grid electric sandwich grillers, each with lock and floating upper lid
- Electromechanical juice extractors, each with a self-contained 2-speed electric motor rated over 300 W but not over 400 W
- Electrothermic automatic drip coffeemakers without electronic clock, each with self-contained coffee holding chamber and designed to be used without separate carafe
- Color video monitors each having a flat panel screen, BNC input connection and video loop-thru connector, the foregoing with a video display diagonal of either 41.9 cm or more but not more than 44.5 cm, or 47 cm or more but not more than 49.5 cm
The above are some of the more colorful and ridiculous examples of these kinds of tax earmarks. The majority of the tax earmarks are chemicals and industrial equipment. If you have any knowledge of chemicals and who might use them and for what use go ahead and check out the bill (HR 6111) and report back in the comments.
