| | In 1890, the McKinley Tariff established the highest tariffs ever, but in a compromise it did make sugar "duty free" (no tariff on sugar). Other than sugar, prices increased on goods and products due to the higher tariffs. These higher tariffs reflected the continued dominance by the Republican Party, which controlled the White House in 1890 (Benjamin Harrison, the grandson of William Henry Harrison, was president). Partly due to public outrage over the higher tariffs, the Democratic Party won many seats in Congress in the 1890 elections after the McKinley Tariff was enacted. | | In 1890, the McKinley Tariff established the highest tariffs ever, but in a compromise it did make sugar "duty free" (no tariff on sugar). Other than sugar, prices increased on goods and products due to the higher tariffs. These higher tariffs reflected the continued dominance by the Republican Party, which controlled the White House in 1890 (Benjamin Harrison, the grandson of William Henry Harrison, was president). Partly due to public outrage over the higher tariffs, the Democratic Party won many seats in Congress in the 1890 elections after the McKinley Tariff was enacted. |
| − | In 1894, the Wilson-Gorman Tariff and Income Tax Act passed, which added an income tax along with increased tariffs. In the case of ''Pollack v. Farmers Loan and Trust Company'', the Supreme Court declared the Income Tax Act unconstitutional because it did not apportion the tax by population as required by the Constitution.<ref>The U.S. Constitution, Article I, Section 9, paragraph 4, states that "No Capitation [head], or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken."</ref><ref>The Supreme Court had allowed other types of taxes, such as an income tax during the Civil War and an inheritance tax. See http://www.reason.com/news/show/30860.html</ref> The Supreme Court decision required a constitutional amendment (the 16th Amendment) to be passed before allowing a direct taxation based purely on income without regard for population. | + | In 1894, the Wilson-Gorman Tariff and Income Tax Act passed, which added an income tax along with increased tariffs. But in the lawsuit ''Pollack v. Farmers Loan and Trust Company'', the Supreme Court declared the Income Tax Act unconstitutional because it did not apportion the tax by population as required by the Constitution.<ref>The U.S. Constitution, Article I, Section 9, paragraph 4, states that "No Capitation [head], or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken."</ref><ref>The Supreme Court had allowed other types of taxes, such as an income tax during the Civil War and an inheritance tax. See http://www.reason.com/news/show/30860.html</ref> The Supreme Court decision required a constitutional amendment (the 16th Amendment, ratified in 1913) to be passed before allowing a direct taxation based purely on income without regard for population. In the 1900s the income tax replaced tariffs as the primary source of funding for the federal government. |