On this day in history, in 1909, the Sixteenth Amendment was passed, which gave Congress the power to collect income taxes.
Passed in 1909, the Sixteenth Amendment was ratified on February 3, 1913. This came after a series of economically destabilizing events, including a period of economic disparity between eastern industries and farmers in the south and west post-Civil War.
The first federal income tax had been imposed in 1861 to fund the Civil War, but it was repealed in 1872. From that point, several political organizations, like the Grange and the Populist Party, pushed for a graduated income tax.
In 1894, a 2-percent tax on income over $4,000 was enacted as part of a tariff bill, but the Supreme Court struck it down, despite having upheld the aforementioned Civil War-era income tax. Progressive Democrats and Republicans persisted in advocating for the income tax. A constitutional amendment for income tax was proposed in 1909, with conservatives believing it would fail ratification and put the issue to bed. Surprisingly, the amendment was ratified by the majority of the states, and the 16th Amendment came into effect in 1913. Despite this, in its initial year, due to numerous exemptions and deductions, only about 1 percent of the population paid income taxes. This decision substantially altered the American economic landscape.
A California judge has allowed Microsoft to proceed with its acquisition of Activision Blizzard despite an ongoing antitrust case led by the Federal Trade Commission (FTC). Judge Jacqueline Scott Corley rejected the FTC's request for a preliminary injunction after five days of intensive testimony. Corley affirmed that while the merger merited scrutiny, the FTC failed to prove the deal would significantly reduce competition. Microsoft's commitments to extend Call of Duty to PlayStation and Nintendo Switch and bring Activision's content to cloud gaming services were considered as factors increasing consumer access.
Microsoft, Activision Blizzard, and their respective leaders expressed gratitude and optimism for the outcome. FTC spokesperson Douglas Farrar expressed disappointment and stated that the FTC would determine its next steps. However, Microsoft still faces regulatory hurdles in the UK, with the Competition and Markets Authority (CMA) previously blocking the acquisition. Both CMA and Microsoft are currently negotiating possible modifications to the deal to address cloud gaming concerns. If Judge Corley's decision is not appealed by the FTC by July 14th, it could indicate the regulator might abandon the case against Microsoft and Activision Blizzard.
The International Brotherhood of Teamsters' recent concessions from United Parcel Service Inc. (UPS) could influence the union's approach to other delivery companies like Amazon and the auto industry's "Big Three". Prior to July 5, UPS agreed to end a two-tier wage system and to equip delivery trucks with air conditioning. This outcome potentially sets a precedent for union negotiations elsewhere, despite current disputes about wages and other economic issues. The successful negotiations illustrate the union's potential to reclaim losses incurred since the late 1980s.
Teamsters President, Sean O'Brien, plans to use this success as a selling point for Amazon workers. The union aims to present itself as an entity capable of securing strong contracts. As previously stated, these successes could influence negotiations between the United Auto Workers and Detroit's Big Three automakers, whose master contract expires in September. The union rate, though at a record low of 10.1%, is highest in the transportation and warehousing sector at 14.5%, indicating potential union interest among these workers.
Tax and law firms are experiencing expansion due to the increased demand for clean energy and corporate clients seeking to capitalize on the tax credits offered by the Biden administration's Inflation Reduction Act, or tax-and-climate law, passed in August 2022. This law encourages companies to reduce greenhouse gas emissions and has led to a surge of interest in the clean energy sector. The law allows tax credits to cover up to 70% of a project's costs and provides a 10-year certainty for incentives. Firms are witnessing a growing number of clients seeking assistance with multifaceted projects involving multiple technologies.
Furthermore, the legislation allows tax credits to be sold or transferred to a third party. This provision has sparked a new market for clean energy developers to sell credits to any corporation looking to offset taxes, potentially increasing investments in renewable energy. The law also includes a direct pay option, which allows tax-exempt entities to receive a cash refund in lieu of a credit.
In response to the increased demand, firms like Holland & Knight and Clifford Chance are expanding their clean energy expertise and resources. Holland & Knight merged with Thompson & Knight to expand its energy practice, while Clifford Chance announced a new office in Houston, a well-known energy transition capital.
A lawsuit filed by Jaime Rogozinski, the founder of /r/WallStreetBets, against Reddit was dismissed by a U.S. judge. Rogozinski accused Reddit of unlawfully banning him from moderating WallStreetBets and infringing upon his trademark rights. He founded WallStreetBets in 2012 and applied to trademark the name in March 2020 when the community reached 1 million subscribers (now 14 million). However, the judge rejected Rogozinski's claim, stating he doesn't own the WallStreetBets trademark and dismissed his state law claims related to his ouster, indicating he lacked the standing to sue. Reddit termed Rogozinski's lawsuit a "transparent attempt to enrich himself."