Wilson–Gorman Tariff Act

The Revenue Act or Wilson-Gorman Tariff of 1894 (ch. 349, §73, 28 Stat. 570, August 27, 1894) slightly reduced the United States tariff rates from the numbers set in the 1890 McKinley tariff and imposed a 2% income tax. It is named for William L. Wilson, Representative from West Virginia, chair of the U.S. House Ways and Means Committee, and Senator Arthur P. Gorman of Maryland, both Democrats.

Supported by pro-free trade members of the Democratic Party, this attempt at tariff reform imposed the first peacetime income tax (2% on income over $4,000, or $88,100 in 2010 dollars, which meant fewer than 10% 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 the Cleveland administration wanted to move away from the protectionism proposed by the McKinley tariff while Cleveland was still in office. By coincidence, $4,000 ($88,100 in 2010 dollars) would be the exemption for married couples when the Revenue Act of (October) 1913 was signed into law by President Woodrow Wilson, as a result of the ratification of the 16th 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 consumer.

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