Haig Simons Income
About Haig Simons Income
The Haig Simons definition of income, developed by economists Robert Murray Haig and Henry C Simons in the 1930s and 1940s, defines income as consumption plus change in net worth during a period. This comprehensive definition includes all sources of income: wages, capital gains, imputed rent, gifts, and inheritances. Most tax systems fall short of the Haig Simons ideal by excluding certain income types. Unrealized capital gains, for example, are generally not taxed under most systems. Proponents of the Haig Simons definition argue it would be fairer and more efficient. Critics argue it would be administratively complex and would require valuing assets annually. The wealth tax debate in the US has revived interest in the Haig Simons approach.
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