Taxes target not "income" - as they purport to - but economic activity. The government could not fund its $3 trillion budget even with a 100% tax on the top 10% of earners. Instead, the bulk of economic activity occurs in small transactions in which taxes are built-in (sales tax, tarrifs, gas tax, etc.) To spread out its burden, government must draw the majority of its revenue from these small economic transactions. The tax rules reflect this reality. IRS Pub. 525 defines income from babysitting as taxable income - when was the last time a rich person was making bank off of babysitting? Barter transactions are taxable - exchanging yard sale items with your neighbor is taxable. Of course, yard sale cash proceeds are taxable income - you know that's how Rockefeller got rich, right? He invested in the yard sale market and he soon became a global yard sale tycoon. Forgiven debt is taxable income - if I loan you $100, then forgive the repayment, you must pay taxes on that $100...