Tariffs for Revenue

Tariffs for Revenue Tariffs are commonly classified into two groups those for protection and those for revenue. Actually, of course, no such exclusive classificatiotl can logically be made. If the tariff is so high that it completely prevents a potential import from coming into the country, it is entirely for the "protection" of the domestic producer, and no revenue results. If the tariff is low enough to allow imports to come in, it produces some revenue; but at the same time, it continues to partially "protect" the domestic producer. This "protection" continues as long as there is any tariff at all. The only way a tariff could possibly serve only for revenue would be to apply it to an import which is not and will not be produced in this country. But even in that situation, American consumers would pay more for this product than they wouid if there were no tariff thus reducing the amount of money available for ex penditure in other ways.

In the early days of our nation's history, tariffs were an important source of revenue because this was the principal device used by the federal government to raise its funds. The first bill passed by the first Congress was a tariff act. In the decade from 1800 to 1810, customs 34 receipts constituted 92 per cent of the income of the national government. The Sixteenth Amendment Since the advent of the federal income tax, made pos sible by the Sixteenth Amendment in 1913, tariffs as a source of revenue have faded into insignificance. In the five years preceding World War II, customs receipts consti tuted only about 7 per cent of the total revenue; in more recent years, the percentage has declined to about 1 per cent. This remarkable decline in the proportion of fed eral income collected through tariffs is not, of course, the result of a general lowering of tariff rates since 1800. It is, rather, the result of the federal government's adding other sources of revenue. In 1800, the federal govern ment took, in taxes, only one to two cents· of each in dividual's income dollar; it now takes about 25 cents out of each dollar.