Revenue Act of 1913
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The United States Revenue Act of 1913 also known as the Tariff Act or Underwood Tariff (ch. 16, 38 Stat. 116, October 3, 1913), imposed the first federal income tax following the ratification of the Sixteenth Amendment and lowered basic tariff rates from 40% to 25%, well below the Payne-Aldrich Tariff Act of 1909. It was signed into law by President Woodrow Wilson on October 3, 1913, and was sponsored by Alabama Representative Oscar Underwood.
The Revenue Act of 1913 passed the House, 281 to 139, in May, 1913. Wilson used his patronage powers to guide it to Senate passage 44 to 37, in September, 1913. Politically it was considered a major triumph for President Woodrow Wilson.
The 1913 Act established the lowest rates since the Walker Tariff of 1857. Most schedules were put on an ad valorem basis (that is, X% of the dollar value of the item). The duty on woolens went from 56% to 18.5%. Steel rails, raw wool, iron ore, and agricultural implements had zero rates. The reciprocity program the Republicans had been pushing was eliminated. Congress rejected proposals for a tariff board to scientifically fix rates, but did set up a study commission.
Less than 1 % of the population paid federal income tax at the time.
|Income level||Tax rate|
|up to $20,000||1%|
|$20,000 - $50,000||2%|
|$50,000 - $75,000||3%|
|$75,000 - $100,000||4%|
|$100,000 - $250,000||5%|
|$250,000 - $500,000||6%|
(Exemption of $3,000 for single filers and $4,000 for married couples.)
 Inflation-adjusted incomes
Corrected for inflation by CPI:
|1913 dollars||2005 dollars|