It met bitter opposition by Conservative Republicans who wanted to protect high tariffs which led to the Aldrich proposal. The compromise Payne-Aldrich Tariff Act had the effect of reducing tariff rates but also enacted a corporation tax. The Payne-Aldrich Tariff Act split the Republican party. President Taft alienated both the Progressive and conservative Republicans and gained a reputation for being weak and indecisive.
Payne-Aldrich Tariff Act for kids: Background History
The previous president, Theodore Roosevelt, had steered way from the controversial subject of tariffs and no laws relating to tariffs were enacted during his presidency. The 1897 Dingley Tariff had been the last act passed and had increased duties (taxes) by an average of 52% and on some items by 57%. The 1897 Dingley Act was designed to protect businesses and industries from foreign competition.
Payne-Aldrich Tariff Act for kids: The Payne proposal
President William Taft believed that high tariffs hurt consumers, limited competition and protected trusts. Ignoring warnings from his friend Theodore Roosevelt he supported a new tariff act to lower rates. New York Representative Sereno E. Payne sponsored a lower tariff bill. In 1909 President Taft called a special session of Congress and the bill was passed by the House of Representatives.
Payne-Aldrich Tariff Act for kids: Joseph G. Cannon
President Taft made a deal with the Speaker of the House, Joseph G. Cannon to push through the Payne proposal. Cannon was disliked by many of the Progressives who wanted to unseat Cannon. Taft agreed to place pressure on Progressive Republicans to stop the vendetta against Cannon who, in return, would push the Payne proposal through the House of Representatives. The Progressive Republicans were furious about the deal and furious with the President.
Payne-Aldrich Tariff Act for kids: The Aldrich Proposal
The Conservative Republicans were totally opposed to the Payne tariff bill. When the bill went to the Senate, the conservative Republican Nelson Aldrich attempted to substitute the Aldrich proposal which called for fewer reductions and more increases in tariffs. The Aldrich proposal made nearly 900 changes to the Payne bill.
Payne-Aldrich Tariff Act for kids
President Taft was persuaded by Aldrich and other conservative Republicans to accept their proposals. The Payne-Aldrich Act was produced as a watered-down compromise consisting of elements from both the proposals. President Taft signed the Payne-Aldrich Bill even though he knew it would split up the Republican Party. Congress subsequently passed the bill officially on April 9, 1909.
Payne-Aldrich Tariff Act for kids: Tariff Schedules
The Payne-Aldrich Tariff Act published a schedule consisting of a charge list of tariffs, prices, rates, etc., arranged or organized in a particular order. It lowered taxes by about 5%.
Payne-Aldrich Tariff Act: Corporation Tax
Aldrich and the conservative Republicans conceded to including a corporation tax in the final version of the law. The corporation tax was a special excise tax of 1% above $5000 on all corporations and also introduced the examination of the accounts of corporations and trusts.
Payne-Aldrich Tariff Act: Effect of the Payne-Aldrich Tariff Act
The effect of the Payne-Aldrich Tariff Act:
President Taft alienated both the progressive and the conservative Republicans and was mauled by the press
President Taft’s compromise led to so much derision that in 1910 they defied the president by joining with House Democrats and removed Joseph G. Cannon from power
Taft lost the presidential election of 1912 and Woodrow Wilson was elected as the next President
The 1913 Underwood Tariff Act re-imposed the federal income tax to Corporation tax and lowered basic tariff rates
In 1914 the hotly contested Corporation Tax was merged into Income Tax