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

[jIM_Ohio]

The taxes received from the rich (Bill Gates and Oprah Winfrey) on the interest they receive is probably close to 90% of the tax paid on interest.

I make around $250-$500 in interest each year. Have around $16000 in savings.

Bill and Oprah have 10-100-1000X what I have in the bank for sure. They are probably in a much higher income tax bracket, so the tax they are paying is probably 90% of total the country collects.

Some observations
a) taking that tax away would increase taxes somewhere else
b) taxes usually hit the middle class the hardest. We are not poor enough to avoid the tax, and the rich don't care about the tax because it's not that important to them.
c) the government will see the need to keep tax revenue constant for the most part. If politicians vowed to remove one tax per year on the consumer (telecomminications, cable, gas, liquor, SS, medicare...), over time we might get to a more fair tax system.

[bjl584]

One solution to this mess would be for the government to curb spending and stop spending money like drunken sailors on shore leave.

[Sallyr70]

I would like to see the first $500 or $1000 interest earned yearly to not be taxed. It might encourage lower-income people to save and the gov't would still get most of their tax revenue.

[Scanner]

Again, taxable interest is the price you pay for keeping your money in "liquidable" investments.

If you want tax-free interest, buy muni bonds. You can even ladder them like CD's so you get your money every so often, keeping them somewhat liquid and having access to your principal.

Is it as convenient as going down to the bank with a Passbook? No. But in todays day and age of internet, it isn't that hard to ladder some muni bonds for some tax-free income, if that's your thing.

The gov't does this to encourage people to loan money to municipalities for infrastructure development, rather than having Americans just hoarding it in a bank account, where the loan officers at the bank can loan it for anything (an internet co., a subprime loan, etc.).

PS: If you look at where really rich people have their money stashed - it's in muni bonds. Even people who are "financial" like Suze Orman. There's a reason for that. It's not just because they are rich and they pay a lot of taxes (yes, that's part of it). It's just that muni bonds make a lot sense in a portfolio.

[disneysteve]

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!

You aren't double taxed. The principal, which is the amount you have already paid taxes on, isn't re-taxed. Only the interest, which is new money, is taxed. I don't like taxes anymore than anyone else, but I realize it is a necessary evil.

[PrincessPerky]

One solution to this mess would be for the government to curb spending and stop spending money like drunken sailors on shore leave.

ditto that one...