quality:corruption, information:classification, quality:correction
Tariff and tax legislation

Democrats had long seen high tariff rates as equivalent to unfair taxes on consumers, and tariff reduction was their first priority. 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." By late May 1913, House Majority Leader Oscar Underwood had passed a bill in the House that cut the average tariff rate by 10 percent and imposed a tax on personal income above $4,000. Underwood's bill represented the largest downward revision of the tariff since the Civil War. It 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.

Nevertheless, the passage of the tariff bill in the Senate was a challenge. Some Southern and Western Democrats wanted the continued protection of their wool and sugar industries, and Democrats had a narrower majority in the upper house. 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 Bryan managed to unite Senate Democrats behind the bill. The Senate voted 44 to 37 in favor of the bill, with only one Democrat voting against it and only one Republican voting for it. Wilson signed the Revenue Act of 1913 (called the Underwood Tariff) into law on October 3, 1913. The Revenue Act of 1913 reduced tariffs and replaced the lost revenue with a federal income tax of one percent on incomes above $3,000, affecting the richest three percent of the population. The policies of the Wilson administration had a durable impact on the composition of government revenue, which now primarily came from taxation rather than tariffs.