Anyone else feel like they're being "wronged?"

[cs1992]

My wife & I are very grateful for the things we have and the lives we've been blessed with, but one thing irritates us...why are our (money market) savings taxed?

[LuxLiving]

Unless I'm missing something our MM savings isn't taxed, just the interest that we earn on it. Is that what you're saying?

I understand the disgust, you can't win for losing - it's the American Way, doncha know?

[Scanner]

Well. . .that's kind of an interesting debate.

How about I reframe it?

Let's just assume we are sticking with an income tax vs. a consumption tax as a country (which looks to be a political reality - it doesn't look like income tax is going away).

Which do you think should be taxed higer?

Earned income (profit, wages, tips)?

or

Unearned income? (dividends, interest, capital gains)

Can you fathom why they tax unearned income?

[cs1992]

Unearned income for those in lower tax brackets should not be taxed...plain and simple. It would encourage people to save more and spend less.

[kendo26]

It's regrettable that were taxed on our savings but depending on what tax bracket your in you may still come out ahead.

[cschin4]

Bury your money in the basement, put in a safe or stick it in the freezer. I know people who do because they don't want to be double taxed.
As for taxation laws, things are going to get worse because people demand more and more from the govt.

[sweeps]

Bury your money in the basement, put in a safe or stick it in the freezer. I know people who do because they don't want to be double taxed.

Do those people quit their jobs too to avoid paying taxes?

[cicy33]

I feel like I am being double taxed. I already paid taxes on my money but if I attempt to save any piddly interest I do make is taxed again! I know that some places pay better interest than others and if you have enough money then you get good interest but I don't and I think it is silly to tax me on such a small amount. However, I feel that savings should not be taxed at all for anybody.

[Ima saver]

I sure wish I was not taxed on interest, but it has always been that way.

[Scanner]

I feel like I am being double taxed. I already paid taxes on my money but if I attempt to save any piddly interest I do make is taxed again! I know that some places pay better interest than others and if you have enough money then you get good interest but I don't and I think it is silly to tax me on such a small amount. However, I feel that savings should not be taxed at all for anybody.

The "double taxation" objection could be applied most anywhere. I earn my paycheck and then I pay "Liquor Tax" on the six pack of beer after I pay "Gas Tax" after consuming a gallon of gas to go to the liquor store.

I am not opposed to an "exemption" or a "threshold" on unearned income but I think the reasoning is this.

You don't want rich people, let's say like Bill Gates and Oprah with their money in a savings account, earning "unearned" income, and not having to contribute to society, when they use part of what society has to offer (roads, bridges, armies to protect them).

Inheritance tax falls into "unearned income tax" too (with a $3,000,000 exemption).

BTW, if unearned income tax is that much of an objection to you, there is a legal way around it - it's called municipal bonds.

You can even buy them insured so you don't risk principal. I am not sure what the minimum bond is, but I bet you can find them for around $1000.

Just call a bond broker or use a discount brokerage and buy one. They pay probably around 4% tax-free.

Problem solved.

[bjl584]

I don't really agree with the way that the American taxcode is structured to begin with, but as far as the interest on my accounts being taxed goes; I guess the only way to avoild it is to bury my money in the backyard in which case inflation would eat away at it. I guess that I will choose the lesser of two evils.

[Broken Arrow]

Just wait until they come up with a backyard burial tax.

[bjl584]

Just wait until they come up with a backyard burial tax.

I wouldn't put it past them. Of course that still leaves us with the mason jar under the sink account, the old shoe box in the attic account, and the stuff it under the mattress account.

[sweeps]

Nah, they'll just enact a reverse sales tax. Any income that you don't spend you will get taxed on.

[bjl584]

Nah, they'll just enact a reverse sales tax. Any income that you don't spend you will get taxed on.

I hope not. It won't be long before the government takes it all. Most of us already work until sometime in May before the money that we earn is our own.