[isostatic]

> Could you explain the rationale for excluding such unearned income, other than privileging generational wealth against wealth earned by personal work and investment?

If I buy a round of drinks, do people have to pay tax?

(I assume there's some minimum threshold)

[mmcconnell1618]

I'm fairly certain the United States Internal Revenue Service would consider the drinks received by others as income they should technically report on their taxes. For practical purposes, I suspect that almost no one ever does report this type of gift, but yes, technically it would qualify.

If I give someone $5 for their birthday, they should report it but won't. If I give them $50,000 for their birthday, they better report it or risk the IRS finding out and coming after them.

[JoeAltmaier]

Gifts < $14K not necessary to report

[dragonwriter]

> If I buy a round of drinks, do people have to pay tax?

Ideally, probably, but even in a system which tries to mitigate the advantage of generational wealth created by the current favorable regime of gift and inheritance tax by a purer income tax, the friction of taxing de minimis personal gifts as income to recipients is something you probably want to avoid.

[vvillena]

They don't, because you do. That's sales tax at work.

Taxes are usually paid each time money moves hands.

[TheCoelacanth]

If you bought a round of Dalmore 62, then yes, otherwise, no because only gifts of more than $15k per year per person incur the gift tax (and technically, you would pay the tax, because the tax is on the giver and not on the recipient).