ABSTRACT
An economic definition of income would include all capital gains in taxable income as they accrue each year. To tax them in this way would be difficult for three reasons: first, the value of many kinds of property cannot be estimated with sufficient accuracy to provide a basis for taxation: second, most people would regard as unfair the requirement to pay tax on income that had not actually been realised: and third, taxation of accruals might force liquidation of assets to pay the tax. Thus capital gains are included in taxable income only when they are realised.
