Can someone check my math please?

[Igel]

6. There's a reason a lot of it is called "unearned income."

Note that it's hard to have negative earned income. Earned income is low risk. Often you go in with you and perhaps a small investment, and you take home net revenues. After paying for required expenses--which, oddly, are tax deductible--we have gross profit, then we invest or retain the profit. Some we keep in cash reserves. Others we provide as additional, taxable benefits.

I work. I bring home pay. I spend money on required things--food, shelter. I deduct taxes for a lot of that; "standard deduction," it's called. Other expenses can be deducted at times. Then I wind up with a net profit that gets taxed. I'm a little mini-business. Heck, I can even deduct investment in upgrading my skill set ("education tax credit&quot . What's hard is for me to start off the day and, because I work, lose money. That's not how it works. I may lose my job, but my employer's not going to charge me $300 this week for not doing my job correctly or "pass through" company debt. At most the employer's going to reduce my wages. (This doesn't always hold for those working on commission.)

It's very easy to have negative unearned income. My father saved up $200k one way or another over his 35 years of full-time shift work and invested it. He reinvested any dividends. Some years, later, he sold stocks or got dividends and made money. Other years he sold stocks and lost money or there were no dividends. In 2008/09 he lost a lot of wealth. It was a gamble, so the unearned income tax was less.

My parents had a large source of unearned income that was convenient. They built a house in '63 for $20k. In '96 they sold it for $240k. They moved across the country and bought a nicer house for less money. That particular unearned income wasn't taxable because too many people like having that source not taxed. It was responsible for a lot of their wealth, though. (Along with stock appreciation.)