Picking the Pockets of American Shoppers : Textile quota: If this bill were called a ‘consumer clothing tax,’ Congress wouldn’t touch it.

If the textile and apparel quota bill recently passed by Congress had been called a clothing tax, it would have lost resoundingly. President Bush has vetoed it, but unless the public understands the consequences of this measure and protests, Congress might very well vote to override him and turn it into law.

Disguising the tax as a quota hides its true nature from the consumer, who has to pay. The public should not be fooled. The bill would severely limit the growth of imports in textiles and apparel by imposing a worldwide quota system--creating, in effect, a global textile monopoly. Quotas create scarcity and dampen competition, which drives up the total price paid by customers, just as taxes do. The only beneficiaries of this law would be U.S. (and foreign) textile manufacturers.

If the President does not get enough support from the public and Congress to sustain his veto, our company, The Gap, and other clothing retailers will have to collect more money from our customers. For the average American household, the bill would preserve the current average cost of quotas, $250 a year, and kick it upward to about $1,000 annually within 10 years, according to the Institute for International Economics. The cost for the nation as a whole over that 10-year period would be $500 billion--an amount roughly equal to the bailout of the S&L; industry.

The powerful textile lobby, allied this year with other special interests, has twisted congressional arms. If that works, prices will soar for clothing from both domestic and foreign sources. We retailers will be hurt, our customers will be hurt, and the U.S. economy will be hurt.

Regular sales taxes in most states rarely exceed 5% to 8%. The “clothing tax” is much higher. A study by the U.S. International Trade Commission conservatively estimates it at about 30%. For items every family must buy it is even higher: 38% for cotton socks, 33% for boys’ shirts, 53% for girls’ sweaters, 32% for boys’ pants or shorts. If the new bill passes, these rates will go higher.

How can the textile lobby get Congress to support taking this much money from consumers? First, the clothing tax is hidden. It is not called a tax when Congress votes for it, and it will not show up as a tax on consumers’ sales slips. This way, Congress can win votes and political support from the textile crowd without taking responsibility for the cost to constituents.

The textile lobby has also been able to persuade many members of Congress that quotas are needed to preserve jobs. But in fact, the retail industry employs 10 times more Americans than the textile and apparel manufacturing industries. Retailers cannot increase employment and may be forced to lay off employees if our customers cannot afford to buy.

To create one new job in the textile industry, paying $15,000 a year, costs the country $128,000 a year in higher prices, according to the Institute for International Economics. It makes no sense to pick our customers’ pockets to save textile jobs when better-paying jobs in other manufacturing industries and retailing will be lost. Also, history shows that textile workers have had more success than others in finding employment elsewhere.

Congress needs to be persuaded that the right policy is to follow the President and dump this hidden tax on clothing.