Issue 664 Interest should not be taxed August 26, 2015

Unearned income is another category that is currently taxed by the federal government.  But is this fair?  I say no, and here is why.

No interest tax:  Interest is a value we place on money that acts as a penalty or as an incentive.  For bank accounts and investments it is an incentive to build up your account to earn more money which allows the bank and the invested company(s) to use that money to support loans and business expansion.  With loans it is a penalty for not paying back the bank quickly enough, which allows the bank to gain back money they would lose from people who would renege on their debt.  In all cases, nothing is exchanged and no effort placed via work to garner such funds.  It is given, and it is a punishment, and thus is not actual income.   As such, the money gathered through interest on loans, the money given by banks in the form of interests for keeping your money in longer, and the interest on your investments which act as a thank you for putting your trust into the company you have essentially given a loan to, is not income.  This is the difference between earned and unearned income, and as such, unearned should not be taxed.

Conclusion:  This is all my opinion, but if you're not earning it via a job for selling your labor, then it is not income.  The way I see it is that interest that acts as a reward is a gift in the same way one receives a gift or inheritance.  Interest as a penalty is not income as it is just that, a penalty on someone for not paying money back the lender on time. Sure, this means big time investors will no longer be taxed and that banks will not be taxed on the money they get from people paying interest on their loans, but neither will you.  You will be free to keep all your money if you invest, or get interest from your bank account.  If you loan money and charge interest, you will not have to file it with the IRS or other tax bodies either if and when interest charges go into effect.  People will be freed from this form of taxation that in my opinion was designed to punish people who gather money through unorthodox means like interest.  People in my opinion were envious of these lucky investors and businessmen who did not have to work at small time jobs all their lives and build themselves up the traditional way.  These taxes on interest are taxes of envy, and I say remove them in all their unfairness and jealousy.