oct 3, 1913 - Revenue Act of 1913
Description:
AKA: Underwood Tariff
Underwood-Simmons Act
An act which restored a federal income tax for the first time since 1872 (the federal government had also adopted an income tax in the 1890s, but that tax had been struck down by the Supreme Court before taking effect) and substantially lowered tariff rates. The act was sponsored by Representative Oscar Underwood, passed by the 63rd United States Congress, and signed into law by President Woodrow Wilson.
Wilson and other members of the Democratic Party had long seen high tariffs as equivalent to unfair taxes on consumers, and tariff reduction was President Wilson's first priority upon taking office. Following the ratification of the Sixteenth Amendment in 1913, Democratic leaders agreed to seek passage of a major bill that would dramatically lower tariffs and implement an income tax. Underwood quickly shepherded the revenue bill through the House of Representatives, but the bill won approval in the United States Senate only after extensive lobbying by the Wilson administration. Wilson signed the bill into law on October 3, 1913.
The Revenue Act of 1913 lowered average tariff rates from 40 percent to 26 percent. It also established a one percent tax on income above $3,000 per year; the tax affected approximately three percent of the population. A separate provision established a corporate tax of one percent, superseding a previous tax that had only applied to corporations with net incomes greater than $5,000 per year. Though a Republican-controlled Congress would later raise tariff rates, the Revenue Act of 1913 marked an important shift in federal revenue policy; In the 1920s, Republicans raised tariffs and lowered the income tax though nonetheless, the policies of the Wilson administration had a durable impact on the composition of government revenue, which after the 1920s would primarily come from taxation rather than tariffs.
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History of Leadership In The States
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