This Day In Market History: Congress Passes 16th Amendment On Income Taxes

Each day, Benzinga takes a look back at a notable market-related moment that happened on this date.

What Happened: On July 12, 1909, Congress approved the 16th Amendment empowering the legislature to charge income taxes on individuals and corporations.

Where Was The Market: The S&P 500 was valued between 9.94 and 10.18, while the Dow Jones Industrial Average rested between 86.15 and 99.05.

What Else Was Going On In The World: The Wright brothers were finishing up the first U.S. military plane to be tested and delivered by the end of the month.

Related Link: A History Of The Minimum Wage

The Income Tax Is Born: In the first change to the Constitution since 1870, Congress voted 318-14 to enable its imposition of income taxes. The preceding debate raised similar points to those heard today.

Advocates like Rep. William Sulzer argued the need to “make idle wealth pay its just share of the ever-increasing burdens of taxation.” Meanwhile, opponents feared the charge could unfairly burden constituents in poor states.

The Amendment was ultimately ratified in 1913 after securing requisite approval from 36 state legislatures. The language of the law officially gave Congress “...power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.”