With Donald Trump’s election, Brexit, and a slew of other events, international trade is at the forefront of political commentary around the world. I wanted to share an interesting case I came across, one that highlights the dizzying complexity of tax and international trade law.
I recently discovered the blog site, Law and the Multiverse, which discusses legal issues involving comic book characters. I enjoy the authors’ creativity very much. And I enjoy even more the writer James Daily’s note on the American case of Toy Biz, Inc. v. United States, 248 F.Supp.2d 1234 (Ct. Int’l Trade 2003).
This case was about Marvel Comics’s use of the Harmonized Tariff Schedule, which is an American Schedule authorized by the United States International Trade Commission. Two attorneys working at the firm noticed that imported “Toys” and “Dolls” were taxed at different rates when entering the country. Toys were taxed at 6.8%, and dolls were taxed at 12%. According to the relevant law, dolls are different from toys because dolls are representations of human beings, and toys aren’t. I want to refrain from a discussion of American tax law as I’d be in way over my head as a Canadian tax law student. I shall simply say that Marvel Comics argued that its imports of X-Men action figures were toys instead of dolls i.e. that the X-Men are not human. This characterization would have caused the 6.8% duty tax rate to apply.
To add to the fun, on a factual point, the X-Men comics themselves suggest that X-Men are human, and therefore dolls… So goes the dizzying nature of law. Who really knows why toys and dolls were dutiable at different rates. Regardless, this decision reflects the value tax lawyers can add to their clients, by combing through various rate schedules, definitions, and classifications.