It seems to me that since we are the government (although less and less) it is ok to forbid taxing everything. It is up to us to decide what gets taxed. The government is entitled to tax what we let it nothing more. It is not their money.
Yes, I was only addressing the use of the language. I think if you talk to most people about subsidies, they believe you are talking about the government sticking their hand in their pocket and writing a check out. But they are tax breaks as well. The word subsidy is used to make it seem much more sinister. As always, he who defines the discussion wins.