Tax reform? Seriously?
You people don't even know what current income tax laws and regs say.

"Exempt income" and "Income that is not" are ALREADY legally defined, codified in U.S. tax regulations.

Look it up... 
"exempt income means"
"income that is not considered tax exempt"
ecfr g ov

Read your own laws and regs, then we can have an informed discussion about tax reform.
Ignorant opinions mean nothing to reality.