August 30, 2006, 9:17 a.m. What Can the Government Tax?The answer, never set in stone, may be changing. By Bruce Bartlett Last week, a federal appeals court in Washington handed down an important decision relating to the definition of income for tax purposes. What is important about the decision is that it is the first in decades to say the Constitution itself limits what the government may tax. If upheld by the Supreme Court, it could significantly alter tax policy and possibly open the door to radical reform. In the case, a woman named Marrita Murphy was awarded a legal...