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[quote=Anonymous][quote=Anonymous]What is income?

The House proposal wants to tax grad school tuition waivers. If you are getting your PhD “for free”, you would actually have to pay tax on it as if they paid you in cash the value of the tuition.

The House proposal wants to eliminate the estate tax. My mother inherited a thousand shares of Exxon at about $20 a share. It’s at $100 now. When she dies, I would inherit those at the $100 value—if I sold them at $105, the only tax would be on the $5 gain, not the $85.

So I ask again—before we get to rates and deductions and what not—what is the income we are even taxing?[/quote]

This. If you assume that everyone works for a living and everyone gets all of their income from wages, coming up with a tax system is easy. Just turn the dial to how progressive you think it should be, and add in what behaviors you feel the government is supposed to encourage and you have it.

The problem is real life is a lot messier. For businesses and individuals with a lot of wealth, the simple question of what their annual income is doesn't have a simple answer. There is a whole profession dedicated to answering that question -- accountants -- and they don't always agree with one another. Then add in the fact that people often don't want their income known. Then add in that wealthy people have a disproportionate influence in how the law is written. Taxing the rich -- really taxing the rich -- is a hard problem.[/quote]

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