Quote Originally Posted by sicboater View Post
A very interesting point of view. I don't know about taxing inheritances though. It is highly likely that money would have been taxed already at least one time; but if not, what if you use it to invest? Then it would be taxed again under your outline. I like your separation of passive and active income. The problem is there is some investing that requires more time and skill than others (i.e. you can't be passive about day trading) would you have all capital gains taxed the same?
Well, maybe you could have a calculation of the number of hours spent actively involved in managing the investments, which would be active income.

The reason for taxing inheritances is so that families wouldn't accumulate great wealth over the centuries.

As for money being taxed more than once, I think that it is reasonable to tax money each time it changes hands. Why should someone have a huge advantage over someone else just because they had a rich parent?