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.