"...getting the Towne Act in the rearview; drawn up largely by the committee chair who had helped sink the last year's version of the Corporations Act, it represented a compromise, incorporating both the thrust of Hearst's vision of a uniform legal regime for corporations while eschewing some of the more radical provision that had caused so many Congressional Democrats to balk. For instance, it exempted businesses that operated exclusively in two states - rather than just one - provided that those states were geographically adjacent (this was the key provision for Senator McAdoo), and it merged the enforcement of the Act with the general uniform accounting rules governed by the ICC, thus foregoing Hearst's vision of an independent Bureau of Corporations. The reworked bill passed by broad margins with a fair amount of Liberal support, too; Heart's willingness to defer to Congressional leadership on the Act served him well, for without it what came next may not have occurred.
In later years, the Revenue Act of 1910 would be described as "the reform from which all else sprung." It was not a commission, or board, or bureau meant to investigate, coordinate or regulate - it definitively, comprehensively placed the federal government in a position of authority it would never again relinquish, and created the precedent that there were limits to wealth inequality where the government would intervene. The first peacetime income and inheritance tax in the history of the United States was nothing short of a radical act.
[1] Despite its negotiations being on their face more placid than the surprise dust-up between White House and Senate that accompanied the less revolutionary Towne Act, they were in fact more difficult behind the scenes. Hearst's most crucial progressive ally in Sulzer was a firm Georgist and was deeply personally skeptical, though not quite to the point of opposition, to a tax on incomes. Hearst suspected, but never had it confirmed, that Johnson was quietly encouraging fellow travelers in the House to back Sulzer on the matter and hold out of a land tax instead.
There were two reasons why Hearst was opposed to this. The first was that the left wing of the Democratic Party was drawn largely from the agrarian West and viewed the wealthy oligarchs of the East as the font of American inequality; to have their incomes and dividends exempted while farmland was taxed would be a betrayal. Beyond that, Hearst's own wealth was, atypically for his class, tied more heavily to mine and timber royalties and the vast acreages in the Mountain West which produced them, and he was more keen to personally pay a tax that placed him on an equal footing with his New York peers and rivals than one which they would largely themselves skirt.
[2] Sensing that Sulzer was the holdup, Hearst quietly visited his oft-rival Bryan and encouraged him to give his acolytes in the House a nudge.
[3]
Though the progressive House revolt against the concentration of power in Sulzer's hands was largely grassroots, that it was led primarily by Bryan's proteges Gil Hitchcock and Ashton Shallenberger, as well as the young radical George Norris
[4] - all Nebraskans - was no coincidence, and was not seen as such. Hitchcock in particular gave an address on the House floor that would have made his mentor proud, pleading for a devolution of power to the committee chairmen and undersigning it as a principle of "true democracy, lest our Republican form of government wither!" Hearst then made his own move, publicly supporting Sulzer (who would not learn of Hearst's role in the House insurgency until years later, when he was out of elective politics) while behind the scenes suggesting that a way to tie the various wings of the party together would be to get the Revenue Act passed.
The Act that left the Ways and Means Committee would for some time bear the name of its chairman, Ohio's long-serving, on-again-off-again Isaac Sherwood, but would in time come to be known simply as "the Revenue Act," for that was the purpose it, to produce a peacetime stream of non-tariff revenue for the federal government for the first time. Indeed, no tariffs were reduced, at least not initially - Hearst was leery to anger working class union voters - and the thresholds for taxation were fairly high and the rates by modern standards low, but to the people of 1910 it was a sea change.
[5] For the first time, all income over five thousand dollars a year - not distinguishing salary from dividend, interest or royalty - would be taxed at a rate of fifteen percent, and all income over ten thousand dollars a year would have an additional five percent surtax atop it. This meant, in practice, that the wealthiest Americas would be paying a fifth of their income to the federal government. In addition, the Act would separately tax inheritances in excess of ten thousand dollars at a one-time flat rate of thirty percent.
[6]
The floor debate around the Act was ferocious in the House. Sulzer, of all people, in the end was the one who sealed it, breaking custom by participating in debate from the well, declaring, "It is no secret that I view a single tax on unproductive land as the fairest and most efficient way to spur prosperity and end poverty in this Republic; my own preferences aside, though, to cast aside this bill over the mechanism of taxation would be to transfer the power of taxation and spending entirely to the class of oligarchy and out of the hand's of the People. As the People's representatives, in the People's House, we must now - and pass this bill now!" The Act would pass the House 230-155. In the Senate, a fierce Liberal filibuster by conservatives Philander Knox and Henry Cabot Lodge was broken in time and two Liberals - La Follette and, more surprisingly, the ancient dean of the Senate William Sprague of Rhode Island - cast votes in favor of its passage. The Revenue Act of 1910 arrived on President Hearst's desk for his signature on April 5, and the Democratic press celebrated it as one of the greatest achievements in the history of the country. It was certainly the most momentous of his Presidency, even on the heels of the Fair Deal of his first term.
The passage of a peacetime tax on incomes felt to Hearst like something of a conclusive event; it had been the crown jewel of the populist and progressive project alongside the direct election of Senators. It would before long also come to feel like the last ride of the core group of men who had dominated American politics for a decade; within a year, McAdoo and Sulzer would both be out of Congress, and Vice President Johnson - who was unhappy about an income tax being passed but kept his opinion private - would have died, and by March of 1913 both Hearst and Bryan would be out of office, too. Together, these five men had delivered progressives victory upon victory; and the timing was quite opportune, for just a month after signing the Revenue Act, Hearst's attention would be turned away from legislative battles as a momentous summer loomed..."
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Citizen Hearst
[1] When combined with everything else Hearst has accomplished, it'll have a reputation more like the People's Budget of OTL Britain or something like that
[2] Remember - Hearst has a somewhat... complicated relationship with the New York elite, even Democratic movers and shakers, especially after he backed Tammany over Roosevelt
[3] We'll be seeing a little more about this in the next update, told from Sulzer's perspective
[4] IOTL a Republican, ITTL a Plains Democrat
[5] All rates I used are based on what the original 1895 income tax and Wilson's income tax approximately taxed, and the dollar amounts roughly on
this. Obviously, TTL would have a different history of inflation, but it should give you a general idea
[6] So the asset is taxable to the inheritor, not the estate.
