14 
The practical difficulty in carrying out such an ideal in- 
come tax either by the method of balances or by the method of 
couples, lies in the lack of easily accessible market measures for 
those items of income nearest the recipient. Measurability is es- 
sential for practical taxation. Theoretically, a meticulous income 
tax should pursue its victim to his dining table and take toll from 
each mouthful, and should go with him to the theatre and tax 
every laugh. No income tax which stops short of these final sat- 
isfactions can ever be a perfectly exact income tax. Such a tax 
would cover all income items including both sides of every inter- 
action. Anything less will be sure to omit some item and is prac- 
tically sure to be either too big or too little. But, since such an 
ideal system of tax collection is impracticable and absurd, we 
are thrown back to the earlier stages and forced to take them as a 
gauge, an anticipating gauge, of the final income. 
It is this necessity of gauging the flow at the mouth of the 
stream by the flow at some point higher up, which introduces most 
of the practical problems of reckoning income correctly. We can 
never tell exactly from the flow higher up stream what the flow 
at the mouth of the stream will actually be. Most coupon cutting, 
it is true, represents not only income from bonds but, a few days 
later it is spent for nourishment, shelter, clothing, amusements, 
etc.,—final income. Ordinarily, therefore, the coupons, as cut, af- 
ford a very close approximation to the real income we seek to 
measure. But in exceptional cases, like Hetty Green’s, the coupon 
cutting is chiefly the forerunner not of such living expenses but 
of reinvestments. It is still income from the bonds but is offset by 
investment elsewhere. Reinvestments, or savings, denote deferred 
income, income enjoyed perhaps in the next generation when 
the coupons from a Hetty Green’s reinvestments are cut and spent 
for nourishment, shelter, amusements, etc., instead of being fur- 
ther reinvested. 
Inversely, a huge profit on the sale of New York real estate 
which has remained in the same hands for a generation is nor- 
mally reinvested, and so normally does not foreshadow expend- 
iture on food and drink. But occasionally, as in the tale of Rip 
Van Winkle, this profit is so used. In that case, evidently, the 
only chance to take it by taxation is before Rip drinks it up. 
- We must not conclude, from the fact that the tax collector 
cannot (and should not) enter every nook and cranny of theoretical 
income, that therefore a theoretically correct definition of income 
is of no practical value. The fact is, on the contrary, that the mis- 
takes of tax legislation, administration and judicial decisions have 
been very largely due to the lack of this theoretically correct un-