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What is counted as taxable income?
What is counted as taxable assets?

None of the above.

A better question is whether we should be taxing earning or spending. The accumulation of wealth is not necessarily a bad thing for society at large. The spending of all available income causes a drain on community resources (Medicare, SS, welfare, etc.)

It would be far better to tax spending than income OR assets. That brings us to:

What is counted as valid deductions (if any)?

If we are taxing consumption rather than creation, I would think we should allow quite a few deductions to make sure that necessary spending was not taxed - unprepared foods, basic clothing, up to 33% of income for housing (tax additional), insurance (life, health, homeowners), charitable giving.

Those who are making just enough to live would not be paying taxes on their necessities, only their luxuries.

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