What should the IRS tax?

I recently read this article in the Silicon Valley Business Journal about free lunch and other perks getting onto the radar of the IRS. It got me thinking about how much value is really there in some of these perks and how incredible they really are as a recruiting tool. I can see the case of the IRS… sure instead of an employee paying for his own lunch out of a salary that was taxed, the company is now paying for it and thus the employee has a bit of a raise. Where is the line though?

If I would normally spend $10 on lunch out of pocket and my employer is feeding me a $50 lunch everyday, should my employer be taxed on the $50, the $10, or the $40?

What about other perks? For example, nicer offices, a great desk, and so on. Which perks make sense to be included and which perks make sense to be taxed? What is the baseline? If all employers in the country started feeding their employees lunch tax free, that would be the new baseline. Will this reach out to all corporate lunches vs. general policies of free lunches? Most of the Fortune 500 firms all provide their senior managers lunch on a regular basis and many investment and law firms provide lunches to staff on a regular basis as well – are they excluded leaving software developers, who probably only eat one healthy meal a day, the only ones starving?

The article does talk about remote workers (on oil rigs for example) still being allowed to get a free untaxed lunch – what about restaurant workers eating on the job tax free? Incredibly grey lines like this make it difficult to ethically make decisions regardless of which side of the issue you are on.