Money and Wealth (Part 21) - Lending (Part B) - Interest; Taxes

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Money and Wealth (Part 21) - Lending (Part B) - Interest; Taxes 1. Interest A. The Bible calls interest usury. B. Usury n. – 1. The fact or practice of lending money at interest; esp. in later use, the practice of charging, taking, or contracting to receive, excessive or illegal rates of interest for money on loan. C. Interest is essentially a charge for the use of borrowed money. i. If one loans a car to a stranger for a month, it is not unreasonable that he would charge him for the use of the car, since during that time he cannot use it himself. ii. If one allows someone to occupy his house for a year, it is not unreasonable to change him rent for the use of it, since during that time he cannot use it himself. iii. Neither is it wrong to charge someone for the use of borrowed money, assuming the person is not poor and doesn’t need the money to meet his basic needs for survival. (i) If one loans money to another, the owner of the money cannot use it for his own needs. (ii) He incurs a loss when he loans money, even if the money is eventually repaid. (iii)The first reason is obvious: he loses the interest/return he would have made on the money in the bank or in investments. (iv) The second reason for the loss is as follows: during the time the money is loaned out, the owner cannot enjoy the things the money can buy, just as he could not enjoy the use of his car or house while it is loaned to another person. (v) There is a principle here at play called the time-value of money. 1. Money, or the things money can buy, are preferred in the present over the future. 2. Men prefer to have things now over having them in the future, all other things being equal. 3. Therefore, present goods or services have more subjective value than future goods or services. 4. When one loans money, he is in effect exchanging more valuable present goods or services for less valuable future goods or services. 5. Therefore, in order to be compensated for the loss, he charges interest on the borrowed money. D. The practice of lending money on usury is not always forbidden in scripture. i. In the parable of the talents, Jesus taught that the lord (which represents Him in the parable) of the servant rebuked him for hiding his talent in the earth, saying that he should have put the money to the exchangers (bank) and obtained usury on it (Mat 25:27). ii. Jesus taught the same thing in the parable of the pounds (Luk 19:23). iii. Israel was able to lend money on usury to strangers (Deut 23:20). E. Taking usury in the following circumstances was forbidden in the Old Testament.  i. Charging interest when lending money to the poor (Exo 22:25; Lev 25:35- 37; Pro 28:8; Eze 18:12-13). ii. Lending money on usury to their brethren (Deut 23:19-20; Neh 5:7-11). iii. Greedily gaining by extortion through the exorbitant use of usury (Eze 22:12). iv. This is the type of usury that a righteous man will not take part in (Psa 15:5; Eze 18:8, 17). F. We can loan money under certain circumstances and charge interest, such as: i. A business loan. ii. A loan to a person for something that is not a need. G. Both loaning and borrowing money on usury, although not always forbidden in scripture, is a good way to become reviled by men. i. Jeremiah lamented that he had neither lent nor borrowed money on usury and was nevertheless cursed by everyone around him (Jer 15:10). ii. This shows that both borrowers and lenders on usury will be cursed by men. iii. Men will curse those who lend on usury (even to those who do so lawfully) because of envy. iv. Men will curse those who borrow on usury because those who do so in many cases are foolish. II. Taxes 1. “A tax is a fine for doing well, a fine is a tax for doing wrong.” (Mark Twain) 2. Taxes are also referred to as custom in the Bible (Mat 9:9). 3. Custom n. – 3. Customary service due by feudal tenants to their lord; customary rent paid in kind or in money; any customary tax or tribute paid to a lord or ruler. 4. a. Tribute, toll, impost, or duty, levied by the lord or local authority upon commodities on their way to market; esp. that levied in the name of the king or sovereign authority upon merchandise exported from or imported into his dominions; now levied only upon imports from foreign countries. 4. Taxes are the means by which governments bring in revenue (Ezr 4:13). A. Tribute n. – 1. a. A tax or impost paid by one prince or state to another in acknowledgement of submission or as the price of peace, security, and protection; rent or homage paid in money or an equivalent by a subject to his sovereign or a vassal to his lord. B. Governments tax the people to pay off debts owed to other nations (2Ki 15:19-20; 2Ki 23:35). C. Tax n. – 1. a. A compulsory contribution to the support of government, levied on persons, property, income, commodities, transactions, etc., now at fixed rates, mostly proportional to the amount on which the contribution is levied. 5. Governments like to expand their empires so they can have a larger tax base (Luk 2:1). 6. Those who are taxed are a subjugated people (Jos 17:13; 1Ki 9:21). 7. Lazy people will be put under tribute (Pro 12:24). 8. God will put a wicked nation under heavy taxation as a judgment (2Ki 23:31-33). 9. God’s ministers should not have to pay taxes on their income (Ezr 7:24). A. Jesus paid taxes (Mat 17:24-25).  B. But He did so for pragmatic reasons, not because He owed it to them (Mat 17:25- 27). 10. Jesus taught us to render unto Caesar what is Caesar's (Mat 22:17-21), and so did Paul (Rom 13:6-7). A. The government does provide some necessary services which they need money to fund, such as national defense, a court system, and a few other things. B. It is not wrong to pay a very low tax to support these necessary things. 11. Though we are supposed to pay taxes, we are not under obligation to pay as much tax as possible. A. Take every legal deduction you can. B. The less you pay in taxes, the more you will have to save, invest, and give. C. Talk to an accountant about ways to lower your taxes such as tax-advantaged retirement saving, health savings accounts, etc. D. When investing in non-retirement brokerage accounts, depending on your income, you can save money on taxes by holding a position for at least one year so that the profit is taxed at a lower rate as a long-term capital gain. E. Small business owners can structure their company as an s-corp to lower the amount of social security taxes they pay, depending on their situation.