# TOM THE DANCING BUG: A Formula for Inequity, Told in Four Generations

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Shoulda been working in a fast food restaurant for that last panel! At least us office grunts typically make a living wage.

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Itâ€™s funny depressing because itâ€™s true!
Whatâ€™s the opposite of observational humor - observational misery?

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Yeah, this isnâ€™t even a joke. Itâ€™s just facts with cartoon animals.

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I like how the strip itself is part of the bar graph.

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Well, the great thing about this country is that anybody has the opportunity to get wealthy. Here is what it all boils down to: risk = rewardâ€¦

Imagine that a man starts a business. He puts a 2nd mortgage on his house. He works a lot of hard 80-hour weeks building his business up. Finally, he becomes successful and hires some employees. Who deserves more of the profits from the business? The person who risked everything to build the business, of course. Now, imagine that the business finally does poorly. If the business goes under, the employees are out of a job. The owner, however, is out of the business that he worked all those years for. Simply stated, the owner put more into the business, so the owner deserves to get more out of it.

This is also the reason to START a business: the thought of getting more money than being an employee. Imagine walking into a room and there are two games of roulette going on. Here are the rules:

1. The minimum bet is \$1, but you can bet whatever you like. If you win, you get \$2. Did you bet \$1? You get \$2. Did you bet \$100? You get your \$100 back, plus an additional \$1. This is equality â€“ everybody gets the same reward, no matter how much skin you have in the game.

2. The minimum bet is \$1. If you win, you get back double what you put in. Bet \$1 and get \$2 if you win. Bet \$100 and you get back \$200 if you win. In this model, the return is proportional to the risk. Some get back more, but those are the ones that put in more.

Now, which game seems more fair to you? Be honest.

I, for one, am grateful for rich people. Rich people start businesses. Poor people also start businesses, and some do become rich. It is the people who are either rich, or become rich that actually MAKE THE JOBS that everybody else depends upon. The people who are the â€śidle richâ€ť get that way by having their money invested â€“ invested in the companies who hire people. Ever heard of a â€śVenture capitalist?â€ť They are the ones who take risks and put money into tiny companies in the hope that some of them will make it big. Without those people, there are a lot of big companies (that provide a lot of jobs) that might not have survived being a tiny company.

I am proof that people can overcome their background. My parents were rather poor. My father got his GED only a couple of weeks before I graduated high school. Through drive and determination, I got an MSEE and now work designing computer chips. I still do not have a lot of free money, but that is because I decided to have two kids, and adopt three orphans from another country. I could be living a better life, but I chose to spend my money providing opportunities for three children who were not originally my own, improving their lives. Overall, it has been difficult but worth it.

I do wish that there were more opportunities for the poor. However, jobs are harder to come by in the last few decades since most of our factory jobs are gone. Go into any department store and try looking for something that says â€śMade in Americaâ€ť on it. The lower-skilled factory jobs have mostly dried up here and moved to Asia. I do not know enough about economics to know if more of a protectionist economy (large taxes on imports) would help. On the one hand, that would provide more local jobs. On the other hand, that would also raise the cost of most goods. But I do know that simply demonizing the rich is not the answer.

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Letâ€™s pretend that you do really well for yourself. You are able to leave your kids a million dollars each. They invest it in companies that shuffle financial dealings around like mortgages but donâ€™t actually invest in products or services. They then live off the investments and do not have to actually work or use their capital to make life better for others but instead just raise rents on the real estate or keep ahead of the financial markets by charging high APRs, putting others further down in a financial hole.

When they have kids they then give their kids three million dollars and those investments maintain a high level of living with no job creation or products, only financial shuffling. Or they send their cash overseas to a holding company that hides any taxes from the US government.

Itâ€™s this latter behavior that is being demonized here, not people who invest in products or services that add to the economy. The idea that some people are born on third base and act like they had to do a lot of work to get a triple when theyâ€™ve never used a bat.

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[quote=â€śSteampunkBanana, post:7, topic:36645, full:trueâ€ť]
Letâ€™s pretend that you do really well for yourself. You are able to leave your kids a million dollars each. They invest it in companies that shuffle financial dealings around like mortgages but donâ€™t actually invest in products or services. They then live off the investments and do not have to actually work or use their capital to make life better for others but instead just raise rents on the real estate or keep ahead of the financial markets by charging high APRs, putting others further down in a financial hole.[/quote]

Sounds like a good reason to put some limits on the TYPE of investments allowed. People who invest in businesses deserve to be rewarded. The people who came up with the schemes that caused the sub-prime mortgage crisis a few years ago belong in prison.

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Precisely. You will note in the comic that the left hand side is performing any actual labor or management of their investments.

However, some people see limiting investments or taxing capital gains as â€śhurting job creatorsâ€ť or â€śimpinging on freedomâ€ť and therefore should be discouraged. When a massive company like GE, whose bank investment arm can make millions in sub-primes, can turn around and claim the IRS owes them money the system is not working.

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Letâ€™s just say that none of these people seem to have any incentive to be productive:

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Both are entirely fair. In the first you are pretty dumb if you bet more than \$1, but I donâ€™t understand why it would be called â€śunfair.â€ť The only thing that is unfair is that the game doesnâ€™t give people who already have a lot of money more options than people who donâ€™t. The assumption that we are supposed to reward people for already having money is so baked into our culture that you actually think itâ€™s unfair when we donâ€™t.

We need facts, not thought experiments, and the facts are in. Having money earns a better return than any kind of work and if you have enough money the risk disappears. Letâ€™s make another game to contrast to the ones youâ€™ve presented:

1. The minimum bet is \$1000. If you win you get \$2010 back, if you lose you lose your money.

The very poor canâ€™t afford a ticket. The less poor canâ€™t afford to risk losing \$1000 for such a modest return. But if you had \$1B then youâ€™d buy 1M tickets and the game would make sure you won \$5M. This is much closer to the reality of investment. Risk is not rewarded, wealth is.

Iâ€™m very happy that successful and talented people can earn six figure salaries, and that people in very demanding professions can do the same. When six figures becomes nine, ten, or eleven we are handing extremely outsized influence to individuals who will use that influence to alter the system to favour them.

If you want to understand how the system is broken, just look around at the high unemployment and crumbling infrastructure. Weâ€™ve got lots of work that needs to be done and lots of people who want to do work, but we are paralyzed when we ask, â€śWho is going to pay for it.â€ť Itâ€™s another way of saying, â€śWe canâ€™t do anything to better ourselves without the permission of the rich.â€ť How is that making things better?

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Unfortunately, those of us that start businesses arenâ€™t what would generally be referred to as rich. I, like yourself, come from a humble background, and through a combination of luck and hard work have â€śMade Itâ€ť. My family doesnâ€™t have to worry about income related issues. We are in the top 5% of US earners as a household.

The one thing I have learned is that it is much easier to hand our savings to an asset manager and say â€śMake us money with the following guidelinesâ€¦â€ť At the end of the year our manager says, â€śHey look at this money you earned, minus my fee! You owe 15% tax on that. Oh, and Iâ€™m referring you to an accountant friend to help you offset that.â€ť. Our household wealth, due to growth of invested assets, is growing much faster than our employment income. Before you ask, yes, we have a small business owner in the household.

Compared to the taxes paid on the money we earn in our demanding 50+ hour/week jobs, 15% is paltry. This illustrates a key point. Those that have money, particularly those with millions of dollars, are able to accumulate wealth at a much faster rate than those burdened with the need to work for it. This is driven by flat or diminishing incomes for the vast majority of households, a concentration of wealth into the hands of fewer and fewer people, and a tax code that disproportionately taxes work compared to wealth. As a member of the top 7%,we have experienced the growth illustrated by the following Pew report: http://www.pewsocialtrends.org/2013/04/23/a-rise-in-wealth-for-the-wealthydeclines-for-the-lower-93/. My fatherâ€™s household, who is in the lower 93% can tell you all about the drop in wealth heâ€™s experienced, primarily due to an increase in costs that he must pay (medical, housing, general inflation) that far outstrips the growth he and his wife have seen in their incomes.

So, Iâ€™m sorry, but I disagree. My household should be paying more taxes, and the â€ślazy richâ€ť should be paying a hell of a lot more, while my father and his cohort should be seeing both more income and fewer taxes.

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The tax code is very complicated. Takes at its face value, the rich are SUPPOSED to pay a lot more than those who are not rich. My wife also owns her own web-based business. She has to pay over 1/3 of her profit to taxes. Many people who are â€śpoorâ€ť do not have to pay ANY taxes. So, by this example, people who are doing OK do have to pay more taxes.

Now, how do the people who are truly rich avoid paying 1/3 of their income to taxes? Having never had plenty of money, I cannot answer this. However, I would expect much of it to boil down to trusts and tax breaks. Trusts are ways to give your money to a non-existent entity. This is honestly beyond me. I know silicon and transistors, not tax codes. Another thing is tax breaks. The government has the power to give tax breaks for certain behaviors in order to encourage that behavior. Buy a hybrid fuel-efficient car? Tax break. Install more insulation in your house? Tax break. Invest in solar energy? Tax break. One problem, as far as I understand it, is that legislators can put tax breaks in the code that will only benefit a few people (read: â€ścampaign donors.â€ť). This is wrong and needs to be stopped. Unfortunately, I have no idea how. There does need to be some way to make it harder for the super-rich to escape paying their fair share of taxes.

One thing that came up a couple of years ago in the presidential race was how much people pay in taxes. Newt Gingrich paid 31% of his income in taxes. That seems fair. It looks like he was not using a lot of tricks and loopholes. Obama paid 20.4%in 2013 on almost 1/2 million. Whether that is fair is a judgment call. It sounds low to meâ€¦

100% inheritance tax?

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OK. I mis-spoke. It is not unfair, as long as the rules are known ahead of time. It IS, however, a reason to never invest more than \$1. In this case, it means that you do not open your own business and create jobs.

[quote=â€śHumbabella, post:11, topic:36645â€ť]
We need facts, not thought experiments, and the facts are in. Having money earns a better return than any kind of work and if you have enough money the risk disappears.[/quote]
Ummm. the risk disappears? How many people saw substantial portions of their income wiped out in the last 15 years due to the economyâ€™s wild up-and-down swings (real estate and stock market)? When the major oil spill happened in the Gulf of Mexico a few years ago, how many tourism-based businesses went bust because people were avoiding oil-soaked beaches? There is NO such thing as a sure thing. The safest investment is a treasury bill, and the rate of return on those is practically zero, and they are also only as safe as the US Governmentâ€™s economic health, which is beginning to look a little shaky.

There is definitely SOME truth in this. Anybody can buy shares of a good mutual fund with as little as a few hundred to invest, but the rewards from such a small investment are not much. It can, however, be done.

Both are rewarded. As I said, there is no such thing as a sure thing. A venture capitalist may invest a million here, 1/2 million there, and hope that one of his investments strikes gold. Not all will. This is where skill comes in â€“ knowing which business to back. Even there, though, there is some luck involved. Even a â€śsure thingâ€ť can loose if somebody else beats you to it and gets there first.

This is true when politicians need to seek big donors to get elected. Democrats and Republicans both seek big money (no clean hands here). If one person is principled enough to NOT seek big money, they get crushed because their opponent out-spends them.

Well, who DOES pay for it? Maybe everybody who receives government money (like wellfare) should have to work for their money, at least as much as they are physically able?

You lost all credibility as soon as you put â€śpoorâ€ť in scare quotes, or maybe a few words earlier. Poor people are not exempt from sales or Social Security or property taxes, or the various flat fees that hit them grossly disproportionately (i.e., \$175 to renew your driverâ€™s license is sofa-cushion change to even middle-class people, but for someone on minimum wage who needs that license to keep her job itâ€™s a big hit, the kind that ruins not only her Christmas but the four months after that too.) Not to mention all the other costs that arenâ€™t technically taxes but still need to be paid. Repeating the lie that â€śpoor people donâ€™t have to pay taxesâ€ť is a libel and a sin and yâ€™all need to knock it the fuck off.

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SteampunkBanana already mentioned that capitalism isnâ€™t itself demonized, not in this case anyway.

Wow, only four sentences in and youâ€™re already working under the assumption that the people at the bottom of the food chain have houses they can mortgage.

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Sorry, I did not know that you were the grammar police. I used quotes because EVERYBODY has their own definition of poor. Your definition and mine might be different. To a truly rich person, I might be considered poor because I do not have enough money to fill up my car with gas until payday, yet I do not consider myself poor.

I do agree with you about all of the flat fees that the government charges. First of all, sales taxes are regressive taxes. That has been an argument against them all along. Donâ€™t like it? Try to convince your state or local government to get rid of them. A few states do (Oregon, for example), but most donâ€™t, even the ones with a strong liberal presence.

As far as social security, that is not really a â€śtaxâ€ť Think of it more like a forced retirement savings. The poor, assuming that they do not die young. are more likely to take out MORE than they put in over their lifetime.

I do agree with the other fees that you mentioned. My taxes go to pay for the DMV, so why is there an extra fee for that? By the way, where is a drivers license going to cost \$175??? In my state it is \$21. Not trivial to a person wihout money, but certainly not the end of the world for a license good for a decade. That comes out to \$0.18 per month.

By your own reasoning, if youâ€™re not rich then itâ€™s because you are lazy and/or bad at finances. So why should we listen to anything you have to say about monetary policy?

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