Bypassing Taxes

One of the most heroic things any company can do is find exploits in the State’s tax code that allow it to provide a product to consumers for less. This both benefits the consumers and is detrimental to the government. I recently came across an article discussing how Converse, the maker of sneakers, bypasses an idiotic tax (a redundant term, I know) to bring its customers a more affordable product:

Have you ever noticed that thin layer of felt on the bottom of a pair of Converse sneakers? It gets torn up almost immediately, of course, as you walk on the shoes. So, why is it there in the first place? It turns out that that felt is there not for functional reasons, but for economic ones—shoes with fuzzy soles are taxed less when imported than those with rubber ones.

Jeff Steck writes on Gazetc that the difference between importing a fuzzy shoe—like a house slipper—and a rubber one—like a sneaker—can be huge. Changing the shoe material can decrease the tariff from 37.5 percent down to just 3 percent. Steck writes:

To benefit from a lower tariff, it isn’t necessary to cover the entire sole with fabric. According to the inventors, “a classification may be based on the type of material that is present on 50% or more of the bottom surface.” (6,471,491) This explains why the “fabric” fuzz extends mostly around the edges of my shoes, where it can take up a lot of area without interfering too much with the traction of the bare-rubber centers.

Why would the United States government put a 37.5 percent tariff on sneakers? Because doing so both enriches it and provides protection to local producers by artificially increasing the price of foreign sneakers. Of course, the tax code is ridiculously complex so any company willing to fund a decent accountant is usually able to find creative ways to either avoid tariffs completely or at least reduce the amount of tariff they have to pay.

While I’ve never had an interest in Converse sneakers, or sneakers in general, I almost want to buy a pair just to support this company’s actions. It’s always nice when a producer is willing to go to bat for consumers living in cesspools of socialist economic policy.