Taxing Loan Proceeds as Income - Huh?

[lustylad]

Originally Posted by eyecu2

I also think that people who own a resource and then take out a loan on it, to use as income, should have to file a claim if they used it as income or for capital improvements. If it's income or used as such - it should be taxable.

All these ppl who own real estate and then borrow out the equity or ppl who do it with stocks and do that similarly - should be held accountable to pay their fair share.

Hello eye! Hope you're doing ok. I took your post above from another thread and moved it here, since it was unrelated to our Q1 GDP result.

It appears you've been busy thinking outside the box again. Cool, man!

Question for you: Back in the days when you worked as a professional banker, did you ever discuss this idea (making the proceeds of secured loans taxable as income to the borrower) with your boss or co-workers? Seems like that would have been an appropriate place to kick around the idea. What did your banking colleagues think of it?

[VitaMan]

If you have to pay it back, how can it be classified as income ? It is not earned income.


There have been cases where if someone does not pay back the loan, it gets classified as income.

[Capital]

Originally Posted by VitaMan

There have been cases where if someone does not pay back the loan, it gets classified as income.

Lots of cases, from student loans, to car loan defaults, to 401k loans.

Thinking outside the box, if I was in charge?

I would tax (not just apply interest charges) IRS balances over, say, $2,500, that are not paid after one year. Too many people "carry" huge unpaid tax balances, and never pay. After two years if you haven't paid your balance and the tax, under my plan, your income is garnished at 50% until paid off. By the way, it's wealthier folks carrying the huge debt IRS balances, enforcement is way too lax. Only 2/3 of taxes owed on April 15 for a particular tax year, is paid by that date.