The Decline and Fall of Taxable Income

After first exploring the intellectual climate that has facilitated the congressional disregard of taxable income, this Article will examine three areas in which taxable income is no longer the exclusive mechanism for allocating the burden of taxation. That examination will outline the undesirable consequences of the decline of taxable income, and demonstrate that Congress need not have disregarded taxable income to secure the desired pattern of taxation. Because the use of multiple rate schedules constitutes the most significant deviation from the concept of taxable income in terms of the number of taxpayers that it affects and the popular resentment against the tax laws that it produces, the propriety of those schedules will be examined most extensively. Thereafter, the Article will address more briefly the increasing role of the zero bracket amount and the unhappy history of the attack on the excessive use of tax preferences. In each instance, the use of a properly revised computation of taxable income rather than a secondary mechanism to allocate the burden of taxation would produce a superior pattern of taxation, and eliminate many undesirable side effects.