Taxes on bank money

[cyberdog]

In the U.S. if I have a large amount of money in the bank does that money get taxed every year resulting in less and less money, or only the interest? I am wondering because I have a friend who says if you were to win a lot of money, lottery or something, and just put in in a bank without investing it eventually taxes would take it all away but I've always been told only the money made from interest is taxed and not the rest.

[COtuner]

Only the interest is taxed on bank account money, if it's a checking account or a basic savings account.

 

Now winnings are taxed immediately upon receipt (counts as income) and it's over 40%. Just like my bonuses at work are taxed at more than 40% as they are above and beyond normal wages, on which the employer picks up a percentage of the taxes.

 

Someone in accounting correct me if needed, please!

[avman]

Only the interest income is taxed if you are keeping it in the bank. Each year on your tax return you report the amount you made as interest and that is added to your total income for the year for tax purposes.

 

Now for a large win like a lottery you get tax withheld at the time you collect the winnings. Then on your tax return you report the lottery winnings as income and they figure out whether they withheld enough at the time you won it or whether you have to still pay a little more in taxes or whether they withheld too much and you get a refund.

[IndigoEye]

Inflation, or this case hyperinflation and devalue of the dollar are what you need to think about. You can't keep that cash sitting in the bank. Much better off paying off a mortgage right now. Gold and silver are the only places to put large cash right now. It's still a good price and will at least double within a year.

 

Did you know The Wizard of Oz is an allegory for money reform in the late 1800's? It's about the bankers (the Federal Reserve), gold and silver.

 

The president, at the time, was William McKinney. William Jennings Bryant ran against him and lost as he advocated a switch to silver reform.

 

Symbolism of characters:

 

Oz = oz. ( Troy ounce of gold.)

Yellow Brick Road = the gold standard.

Emerald City = Wa, DC. (emerald green = fiat currency)

The Wizard = The president, Charlatan.

Man behind the curtain = International bankers. Little man in reality. The Federal Reserve.

(I was confused about the "wizard" and "man behind the curtain" being separate; but makes sense now: The wizard doesn't really exist. An illusion, just as the president's power doesn't really exist. "man behind curtain" does exist as does the banker's power, masqued as "presidential power".)

Dorothy = the commoner.

Tin Man = the industrial worker.

Scarecrow = dumb farmer (considered so by the bankers) without the wit to know.

Lion = Bryant. (Forgot the significance of Lion's lack of courage.)

Good witch = good bankers.

Wicked Witch of the East = the Eastern bankers, bad ones.

Water bucket = Western drought.

Good Witch of the North = the Northern Electorate. Her kiss to Dorothy is a mandate of the Northern Electorate.

Dorothy's slippers = Originally, in the book, her slippers were silver. They changed them to ruby for the film; but, they represent silver counter-balancing gold.

I forgot who Toto symbolizes. Barney the White house dog? Doubt it.

 

So, that's the Paul Harvey on that. Hope it was interesting.

 

Frequent link removed at least.

[cyberdog]

Yes I agree paying off a mortages and bills right would be the way to go. But I was wondering after paying off such things if the money left over eventually be taxed into non-existence.

[ErikT]

No, it would not be taxed into non-existence. Just the interest would be considered income in the following years.

 

Plus, there are ways that you come minimize the initial tax burden on the winnings.

 

Did you win? or is all of this just retorical?

[ErikT]

A little more depth on the allegory IndigoEye brought up.

 

In the story, Dorothy is swept away from Kansas in a tornado and arrives in a mysterious land inhabited by `little people.' Her landing kills the Wicked Witch of the East (bankers and capitalists), who `kept the munchkin people in bondage.'

 

In the movie, Dorothy begins her journey through the Land of Oz wearing ruby slippers, but in the original story Dorothy's magical slippers are silver [a reference to the bimetallic system advocated by W.J. Bryan]. Along the way on the yellow brick (gold) road, she meets a Tin Woodsman who is `rusted solid' (a reference to the industrial factories shut down during the depression of 1893). The Tin Woodsman's real problem, however, is that he doesn't have a heart (the result of dehumanizing work in the factory that turned men into machines).

 

Farther down the road Dorothy meets the Scarecrow, who is without a brain (the farmer, Baum suggests, doesn't have enough brains to recognize what his political interests are). [shades of Marx's critique of peasants!] Next Dorothy meets the Cowardly Lion, an animal in need of courage (Bryan, with a load roar but little else). Together they go off to Emerald City (Washington) in search of what the wonderful Wizard of Oz (the President) might give them.

 

When they finally get to Emerald City and meet the Wizard, he, like all good politicians, appears to be whatever people wish to see in him. He also plays on their fears.... But soon the Wizard is revealed to be a fraud--only a little old man `with a wrinkled face' who admits that he's been `making believe.' `I am just a common man,' he says. But he is a common man who can rule only by deceiving the people into thinking that he is more than he really is.

 

`You're a humbug,' shouts the Scarecrow, and this is the core of Baum's message. Those forces that keep the farmer and worker down are manipulated by frauds who rule by deception and trickery; the President is powerful only as long as he is able to manipulate images and fool the people. [Politics doesn't change, does it?]

 

Finally, to save her friends, Dorothy `melts' the Wicked Witch of the West (just as evil as the East), and the Wizard flies off in a hot-air balloon to a new life. The Scarecrow (farmer) is left in charge of Oz, and the Tin Woodsman is left to rule the East. This populist dream of the farmer and worker gaining political power was never to come true, and Baum seems to recognize this by sending the Cowardly Lion back into the forest, a recognition of Bryan's retreat from national politics.

 

Dorothy is able to return to her home with the aid of her magical silver shoes, but on waking in Kansas, she realizes that they've fallen off, representing the demise of the silver coinage issue in American politics.

 

Dorothy = the American people: plucky, good natured, naive.

 

Toto = the Prohibition (Temperance) party. Favored the bimetallic standard but like any fringe group often pulled in the wrong direction. So they got to be a dog. (Toto is a play on "teetotalers.")

 

Oz = the almighty ounce (oz) of gold.

 

The yellowbrick road = paved with gold bricks, leads to nowhere.

 

Dorothy's silver slippers = originally the property of the Wicked Witch of the East, until Dorothy drops the house on the witch. Walking on the yellowbrick road with the silver slippers represented the bimetallic standard. (MGM changed the silver slippers to the vivid (garish, even) ruby slippers to exploit the fabulous technology of Technicolor.)

 

The Good Witch of the North = New England, a populist stronghold.

 

The Good Witch of the South = the South, another populist stronghold.

 

The Wicked Witch of the East = Eastern banking and industrial interests. She is killed by Dorothy's falling house because the Populists expected that the eastern industrial workers would vote Populist, but this never really happened.

 

The Wicked Witch of the West = the West was where the Populists were strongest. The only reason why the West gets a wicked witch is a) you need two bad guys to balance the two good guys, and especially, b) William McKinley was from Ohio, then thought of as a western state. (I guess.) The wicked witch is sometimes identified directly with President McKinley.

 

The Munchkins = subjects of the eastern banking and industrial interests, i.e., eastern workers who didn't vote for Bryan.

 

The Scarecrow = western farmers. They were Populists.

 

The Tin Woodsman = eastern workers. Populist mythology always looked to this group for support, but never actually found it in reality. Baum realized this (most Populists didn't) and shows the Tinman as a victim of mechanization. He's so dehumanized he doesn't have a heart.

 

The Cowardly Lion = William Jennings Bryan.

 

The Emerald City = Washington D.C. The color is suggestive of paper greenbacks.

 

The Wizard = President McKinley, but sometimes his advisor, Marcus Alonzo Hanna.

 

link removed

 

The funny thing is my wife hates all things political...but LOVES this movie. If she only knew!

[IndigoEye]

link removed"The funny thing is my wife hates all things political...but LOVES this movie. If she only knew!"

 

Hilarious. (Not so hilarious: If they all only knew.)

 

Thanks for the link! I was just taking note from a radio show.

 

Cyberdog: Won't be your biggest worry. (Can't elaborate here.) But think of taxes in an all-encompassing way. Many new ones coming.

 

Once it's in the bank, it's the devaluing that you look at. That's why I say get out of cash and into metals. They will go up.

[cyberdog]

It's all just theoretic, I didn't win and neither did my friend. He just made the comment to me about how just putting it in banks would loose it over years to taxes and I made a comment back that I thought only the interest is taxed, but I wanted to make sure for certain. He seems to have it in his head that it would be taxed as property tax or something odd like that, I don't know why.