ABSTRACT
This chapter argues that fundamental fairness principles demand changes in US tax law to place those who rent on an equal tax footing with those who own their residences. The US federal income tax is replete with schedular features that cause identical amounts of income differing in form, use, or source to be subject to differing rates of tax. The chapter discusses the general rules governing the taxation of income and gain from capital investment and position home ownership in the context of investment of capital. Some productive uses of capital remain exempt from tax even absent a statutory exclusion. Homeownership is probably the most prominent of those untaxed productive uses. Exclusion of the use value of a personal residence from the income tax base is just such a troubling violation of the horizontal equity principle. Devotion of one's uncompensated time to performance of services for oneself or members of one's family is indeed outside the line of commerce.
