Revenue Act of 1913

[1][2][3][4][5] The act was sponsored by Representative Oscar Underwood, passed by the 63rd United States Congress, and signed into law by President Woodrow Wilson.

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.

[7] He argued that the system of high tariffs "cuts us off from our proper part in the commerce of the world, violates the just principles of taxation, and makes the government a facile instrument in the hands of private interests.

[7] Shortly before Wilson took office, the Sixteenth Amendment, which had been proposed by Congress in 1909 during a debate over tariff legislation, was ratified by the requisite number of states.

[9] Following the ratification of the Sixteenth Amendment, Democratic leaders agreed to attach an income tax provision to their tariff reduction bill, partly to make up for lost revenue, and partly to shift the burden of funding the government towards the high earners that would be subject to the income tax.

[11] Underwood's bill, which represented the largest downward revision of the tariff since the Civil War, aggressively cut rates for raw materials, goods deemed to be "necessities," and products produced domestically by trusts, but it retained higher tariff rates for luxury goods.

[13] Seeking to marshal support for the tariff bill, Wilson met extensively with Democratic senators and appealed directly to the people through the press.

After weeks of hearings and debate, Wilson and Secretary of State William Jennings Bryan managed to unite Senate Democrats behind the bill.

Congress rejected proposals for a tariff board to fix rates scientifically, but it set up a study commission.

The Underwood-Simmons measure vastly increased the free list, adding woolens, iron, steel, farm machinery, and many raw materials and foodstuffs.

The example set several years prior by special legislation exempting Gate of Heaven Church in South Boston from paying a duty on stained glass windows led to stained glass windows being exempt from all duties for all houses of worship.

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.