09 January 2009

American Idealist

Thomas Woodrow Wilson (December 28, 1856 – February 3, 1924) was the twenty-eighth President of the United States. His first term comprised of many domestic firsts including the Revenue Act of 1913 and the establishment of the Federal Reserve Bank. For 124 years, the largest source of the U.S. government revenue was generated by tariff duties. Prior to 1913, there were 19 different tariffs established by the government. In pursuing tariff reform, Wilson laid the groundwork for lower tariffs by creating a federal progressive income tax to supplement the reduced government revenue. In a few years, the federal income tax surpassed tariff revenues as the chief source of government revenue. The Revenue Act allowed rather high exemptions to income tax and a top marginal rate of 7% on those earning over $500,000 (10.7 million in today's dollars). The exemption for married filers in 1913 was comparable to income over $85,800 in 2008 dollars versus today's tax exemption of $17,900, and marginal rates have now increased to 35%. It was the 4th tax act in the 137-year history of the government which went on to create 45 new tax acts in the following 95 years.

Wilson's second term centered on foreign issues relating to World War I. He campaigned for maintaining America's neutrality but German submarine attacks eventually caused Wilson to declare war on the Central Powers in 1917. After the War, Wilson worked to develop his foreign policy "idealism" of world peace and self-determination by helping shape the Treaty of Versailles and forming the League of Nations. Although this work earned him the 1919 Nobel Prize, his own government chose not to ratify the Versailles Treaty nor join the League of Nations.

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