In a letter published on Oct. 20, a reader sets out his “ideas for tax reform” and ends with a solicitation for comments on it.
His definition of income is “cash or wages that you see for the first time in a calendar year.”
Taken on its face, this would mean loan proceeds constitute taxable income. Fancy paying 25 percent on your mortgage loan?
This provision highlights a defect in most proposed tax simplification schemes, including most “flat-tax” proposals. The current system owes much of its complexity not to the computation of the tax, but on deciding what is taxable in the first place, and often for good reason.