It's not just semantics, though. It's pointing out that some people - including nearly all billionaires - are able to earn a tremendous amount of money while paying federal taxes at a much lower rate than the average salaryman. It's just not correct to say that they haven't actually earned anything, simply because under the current tax code those earnings are excluded from realized taxable income.

You're forgetting something else: How stock grants actually work.

Let's say I work for XYZ company and my compensation package is a mix of salary, bonus and stock (this is how the tech industry works).

My salary is $100,000 and my bonus is $20,000. I pay taxes on the combined $120,000 at whatever marginal rate that is.

But let's say I also receive $100,000 in stock payable to me over 4 years and let's say that XYZ is currently trading at $10/share. That means my total grant is 10,000 shares and I get 2,500 this year, 2,500 next year, etc.

That means I earned an extra $25,000 in income. I pay tax on that. Usually what companies do is 'sell' some of the granted shares on your behalf to cover the tax. I would therefore get 2,500 shares minus however many it took to pay the current year's tax bill. For laughs let's say the tax rate is 20% and so they sold $5,000 worth of shares (500) to pay the tax. I net out with 2,000 shares.

Let's further say that XYZ is a growing company and next year's stock price is $20. That means my 2,500 awarded shares turn into $50,000 in additional income...so they sell more shares on my behalf to pay that year's tax. This time they have to sell 500 shares to pay my $10,000 tax bill. I net out with 2,000 shares again.

My total paper gain is $20 x 4,000 shares = $80,000.

Should I have to pay tax on that?

I then hold