What was the primary purpose of the Underwood Tariff, enacted in 1913?

What was the primary purpose of the Underwood Tariff, enacted in 1913?

• A. Increase duties on imports
• B. Reduce duties on imports and tax higher earners
• C. Eliminate income tax altogether
• D. Distribute tariffs equally among all consumers

Answer: (B)

The Underwood Tariff, enacted in 1913, was primarily designed to reduce duties on imports, making foreign goods more accessible to American consumers. This tariff was part of President Woodrow Wilson's broader economic reform agenda, which aimed to lower prices for consumers and increase competition. Additionally, the Underwood Tariff introduced a federal income tax to compensate for the revenue losses resulting from lower tariff rates. By placing a higher tax burden on wealthier individuals, the legislation sought to create a more equitable tax structure while promoting free trade and reducing reliance on tariffs for government revenue. Thus, it effectively combined the goal of reducing import duties with the implementation of a progressive income tax, affirming choice B as the correct answer.

The Underwood Tariff, enacted in 1913, was primarily designed to reduce duties on imports, making foreign goods more accessible to American consumers. This tariff was part of President Woodrow Wilson's broader economic reform agenda, which aimed to lower prices for consumers and increase competition. Additionally, the Underwood Tariff introduced a federal income tax to compensate for the revenue losses resulting from lower tariff rates. By placing a higher tax burden on wealthier individuals, the legislation sought to create a more equitable tax structure while promoting free trade and reducing reliance on tariffs for government revenue. Thus, it effectively combined the goal of reducing import duties with the implementation of a progressive income tax, affirming choice B as the correct answer.