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28th Governor of New York 22nd & 24th President of the United States
Tenure Presidential campaigns Legacy
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TheRevenue Act orWilson-Gorman Tariff of 1894 (ch. 349, §73, 28 Stat. 570, August 27, 1894) slightly reduced theUnited States tariff rates from the numbers set in the 1890McKinley tariff and imposed a 2% tax on income over $4,000.[1] It is named forWilliam L. Wilson,Representative from West Virginia, chair of theU.S. House Ways and Means Committee, andSenatorArthur P. Gorman ofMaryland, bothDemocrats.
Supported by pro-free trade members of theDemocratic Party, this attempt at tariff reform imposed the first peacetimeincome tax (2% on income over $4,000 (equivalent to $145,369 in 2024), which meant fewer than 1% of households would pay any). The purpose of the income tax was to make up for revenue that would be lost by tariff reductions. The Democrats under theSecond presidency of Grover Cleveland wanted to move away from the protectionism proposed by the McKinley tariff while Cleveland was still in office. By coincidence, $4,000 (equivalent to $145,369 in 2024) would be the exemption for married couples when the Revenue Act of (October) 1913 was signed into law byPresident Woodrow Wilson, as a result of the ratification of the16th Amendment to the U.S. Constitution in February 1913.
The bill introduced by Wilson and passed by the House significantly lowered tariff rates, in accordance with Democratic platform promises, and dropped the tariff to zero on iron ore, coal, lumber and wool, which angered American producers. With Senator Gorman operating behind the scenes, protectionists in the Senate added more than 600 amendments that nullified most of the reforms and raised rates again. The "Sugar Trust" in particular made changes that favored itself at the expense of the foreign competitors.
PresidentGrover Cleveland, who had campaigned on lowering the tariff and supported Wilson's version of the bill, was devastated that his program had been ruined. He denounced the revised measure as a disgraceful product of "party perfidy and party dishonor," but still allowed it to become law without his signature, believing that it was better than nothing and was at the least an improvement over the McKinley tariff.
Democratic RepresentativeJames G. Maguire of California, aGeorgist, proposed an amendment to the bill that would have established a nationalsingle tax. Intended as a substitute for the income tax, it would have levied a direct tax of $31,311,125 onland values nationwide. Only six Representatives voted in favor:Michael D. Harter andTom L. Johnson of Ohio,Charles Tracey andJ. De Witt Warner of New York,Jerry Simpson of Kansas, and Maguire.[2][3]
TheNew York Times reported that many Democrats in the East "prefer to take the income tax, odious as it is, and unpopular as it is bound to be with their constituents" to defeating the tariff bill altogether.[4] Democratic Representative Johnson of Ohio supported the income tax as the lesser of two evils:"he was for an income tax as against a tariff tax; but he believed, that it was un-Democratic, inquisitorial, and wrong in principle."[5]
The income tax provision was struck down in 1895 by theU.S. Supreme Court casePollock v. Farmers' Loan & Trust Co.,157 U.S.429 (1895). In 1913, the16th Amendment permitted a federal income tax.
The tariff provisions of Wilson-Gorman were superseded by theDingley Tariff of 1897.
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