THE FUTURE OF TEXTILE MANUFACTURING
Our Recommended Policy Tool: A Textile Tax By Material
We propose a 15% capital gains tax on the use of non-renewable or environmentally harmful raw materials.
Why is a tax needed?
The textile industry produces large amounts of both pre-consumer and post-consumer waste. We believe that taxing textile manufacturers based on their use of non-renewable and environmentally degrading materials could incentivize the switch from conventional raw materials to more sustainable alternatives such as hemp.
This tax will ultimately influence large corporations to reconsider their practices to the benefit of the consumer and the environment. Reliance on non-renewable and environmentally damaging textile resources must be phased out in order to ensure we leave future generations with a healthy and safe world.
Who is responsible for implementing and collecting the tax?
Congress has many responsibilities including law making, approving presidential appointments, approving treaty negotiations by the executive branch,and overseeing many executive agencies (Vig, Kraft, and Rabe, 2020).
Congress is also in charge of implementing our proposed tax. Congress would initially pass the tax as a bill. NGOs and legislators acting against the fast fashion industry would likely influence the passing of the tax. For example, if a legislator is funded by a fashion corporation like Nike, they may be less willing to support a bill that will put a tax on the corporation funding their seat in Congress. Despite these challenges, Congress is still the source responsible for implementing our tax.
The International Revenue Service (IRS) will be in charge of collecting the tax. The IRS would administer the tax law that Congress puts in place. The IRS is in charge of tax return processing, taxpayer service, and enforcement.
For more information on how these groups and individuals could support our proposal, visit the Policy coalitions and lobbyists tab.
How will we implement a tax?
Manufacturers will pay a 15% capital gains tax on sales of products sourced from non-renewable materials such as synthetic fibers, wool, or cotton.
The tax will be applied per non-renewable source used. For example, using multiple non-renewable sources means the company will overall have to pay more in taxes compared to other manufacturers that incorporate more renewable resources.
The money collected from the tax will be put towards subsidies for hemp production and sales.
This will incentivize textile manufacturers to switch from the use of traditional textile materials to more sustainable alternatives.
Benefits and Drawbacks of our Tax
By implementing a tax on non-renewable sources, we will disincentivize companies from cutting corners and using cheaper but environmentally harmful materials. This will pressure companies to create more sustainable clothing, generate less toxic waste, and source their materials from more environmentally friendly materials.
One of the main drawbacks to this tax is that it will likely be met with backlash from fast fashion companies. These brands would likely argue that this will raise the price of their clothing, causing a decrease in there profit margins. These companies would likely use lobbyists to dissuade congress from passing the tax, which could prove to be a formidable obstacle in its road to implementation. Another drawback of our tax is that the burden of increased textile manufacturing costs could fall on the consumer. This raises questions about the equity of the outcome of our tax. However we believe that this may only be a problem until supply chains for hemp production and refinement are more established.
What is the timeline for the tax?
Our policy requires that taxes on non-renewable clothing materials be fully implemented by 2025. By 2040, we expect to see a large decrease in non-renewable clothing materials listed on labels produced in the US. Consumers are actors in this policy implementation that can aid in the textile industry’s transition to renewable sources by buying from companies that incorporate those materials more. Therefore, consumers and policymakers will be able to check the progress of the fast-fashion/textile industry.
How will this promote sustainability?
A tax based on non-renewable resource use will promote recycling textiles and the switch to renewable resources for clothing (such as hemp). Taxing non-renewable resources incentivizes companies to reduce their resource consumption and waste. By doing this, they significantly reduce their losses since they are willing to use renewable sources in order to avoid the tax.
Polyester is an example of a nonrenewable material used for many clothing items. Fabrics like polyester, spandex, and nylon could take between 20 to 200 years to break down. Large amounts of water are used to create fabrics like polyester, reducing the clean drinking water in scarce areas and possibly polluting local water bodies with the chemicals accumulated in the wastewater from the production process. Even after the manufacturing process, these fabrics continue to have serious environmental health consequences. Each washing cycle can release more than 700,000 plastic fibers into the environment, contributing to microplastic pollution that are significantly impacting ecosystems. The figure below reveals the releases of primary microplastics to world oceans in percentages.
