Some tax protestors claim that the whole income tax law is defeated because the tax statute contains no definition of the term "income." The statute defines "gross income" (section 61) and "taxable income" (section 63) but not the ultimate term "income" itself.

Well, it's true that the income tax statutes don't define the term "income." And obviously that is a very important term in the statute. But there are two reasons why the statute is fully effective despite this omission.

1. There's no requirement that every term in a statute be defined. Lots of statutory terms are undefined. In fact, Congress could almost never define every term in a statute, because terms have to be defined by other terms, so in the end there's almost always some undefined term.

The general principle is that "unless otherwise defined, words will be interpreted as taking their ordinary, contemporary, common meaning." Perrin v. United States, 444 U.S. 37, 42 (1979). So there is a well-accepted method of dealing with undefined terms in a statute: just give the terms their ordinary, common meaning.

The term "income" is a common term. We all have a pretty good idea of what it means. One can see it defined on dictionary.com as "The amount of money or its equivalent received during a period of time in exchange for labor or services, from the sale of goods or property, or as profit from financial investments." Congress is perfectly entitled to use such a common term without specifically defining it.

By looking to common meaning, the Supreme Court has had no trouble interpreting the term "income" in the tax code. In early cases, the Court interpreted the term to mean "the gain derived from capital, from labor, or from both combined." E.g., Eisner v. Macomber, 252 U.S. 189, 207 (1920). More recently, the Court has suggested that the term means, even more broadly, all "accessions to wealth." Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (1955). That is the accepted definition in tax law today. So the income tax law is not ineffective just because it does not specifically define the term "income."

2. Moreover, while the income tax code does not comprehensively define the term "income," section 61 does provide numerous examples of "gross income," and these examples cover all the income most people have. People who complain that the term "income" is undefined usually ignore this point, but section 61 provides:

26 U.S.C. § 61

. . . [G]ross income means all income from whatever source derived, including (but not limited to) the following items: (1) Compensation for services, including fees, commissions, fringe benefits, and similar items; (2) Gross income derived from business; (3) Gains derived from dealings in property; (4) Interest; (5) Rents; (6) Royalties; (7) Dividends; (8) Alimony and separate maintenance payments; (9) Annuities; (10) Income from life insurance and endowment contracts; (11) Pensions; (12) Income from discharge of indebtedness; (13) Distributive share of partnership gross income; (14) Income in respect of a decedent; and (15) Income from an interest in an estate or trust. . . .

This section demonstrates that, whatever the term "gross income" means for purposes of the income tax laws, it at least includes the 15 items on this list. This list includes all income that most people have.

Since the list proves that the statutory term "gross income" at least includes these items, there's not much point even getting started with a complaint that the statutory term "income" is undefined if your income is covered by the items on the list. If, like many people, you have income that consists just of wages from your job and interest on your bank account, you are covered by items 1 and 4 and there's just no point complaining that the definition isn't more fully spelled out.