The Sixteenth Amendment

In trying to appraise a tariff which is levied for revenue purposes on a particular commodity, the same tests should be applied as are used to appraise an excise tax. In fact, a tariff in this sense should properly be called an excise tax. The question of tariffs as a source of government revenue-as a tax-need not concern us here. But it should be remembered that tariffs have sometimes been imposed under the guise of being strictly for revenue purposes, whereas they were actually for purposes of protection. 35 Tariffs and the Balance of Trade One of the fallacies popular throughout the world is the belief that exports are good and imports are bad. If we sell more than we buy, we have a "favorable" balance of· trade-and that is supposed to be good. Actually, in a free market there is no such thing as a favorable or unfavorable balance of trade. There is simply a balance. Trade between nations is not different in this respect from trade between individuals. Suppose you sell a bushel of apples for two dollars. You get two dollars, which you would rather have than the apples; the buyer gets the apples, which he would rather have than two dollars. A perfect balance!