If God punishes evil why are people evil?

Punishment does not equate to hatred or anything of the sort. Because God loves us, He punishes us for the evil or wrong we have committed; sometimes in this lifetime, and if not, in the next.

An example, on a smaller scale, of how punishment shows that God does care would be ones parents. Say a child decides they'll skip school and hang with friends because they see it as being a lot more fun. The child's parents finds out about it and choose to...

Either not punish them, and so the child sees nothing wrong with what they are doing by not getting an education. Eventually, they have a harder road to go down in life and have a harder time pursuing any career because they are not properly educated.

Or they choose to punish them by grounding them and taking away certain privileges until the child behaves. The child may be unhappy with the punishment, but because they don't want it to happen again, they stop skipping school and, in turn, get an education which helps them in the long run of life.

So, although punishment isn't pleasant, it does serve a purpose and does not take away from the love God has for us, but in fact, shows how much He does love us because He doesn't want us hurting ourselves or others in the end.