You start letting people pick and choose which kinds of income stay out of the tax man's reach, and you're opening a slippery slope to large scale fraud.
Accountants like me have done this since time immemorial. I set up my uncle's sole proprietorship as an S-corp with full pass-through where he basically claimed about 20,000 of normal salary on about 300,000 dollars of profit annually, using the rest as an AAA distribution (effectively dodging taxes in the process). The IRS got hip to guys like us doing that and fixed it, as well they should have.
Picking and choosing which income is taxable and which is not is bad news. Pretty much all earned income is taxable, and with good reason.