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# Interest of Money Tax

## Definition

A tax imposed on the revenue derived from lending money at interest, which
cannot raise the rate of interest itself but must be borne by the lender
through reduced returns or passed on to borrowers through higher borrowing costs.

## Source Chapter

Book V, Chapter 2

## Context

Smith argues that the interest of money is a less proper subject for direct
taxation than land rent because the amount of capital is difficult to
ascertain and can be easily moved between countries, making such taxation
inefficient and potentially harmful.

## Economic Domain

General Theory

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