I'm more curious about when this was a reality beyond lifting someone out of direct poverty.
Alright, I run a business, so let's talk some numbers in the modern day environment. As a pass-through entity, all business income is considered personal income for the consideration of taxes. In addition, to federal income tax, which can range up to 28% for sub $100k income, business owners pay both halves of their FICA, which is 15.3%. Then, there's state income tax. Now, it's hard to just add tax numbers due to deductions, which will change with the GOP tax rules, but my overall rate last year was 28%. Of course, this doesn't cover things like healthcare. I live in a low cost area, but I pay $447 a month for a policy with an out of pocket max of $2800. That means, that I have to budget around $8k/year right now to account for medical ailments, which means that I have to account for up to a 40% loss of income when factoring in medical and taxes. What does this mean in aggregate? You need to be in a business that makes a fair amount of money before it's possible to be stable financially.
Now, is someone who comes from an impoverished situation it a place where they can generate that kind of money from get get go? Probably not. Alright, so we can then work a job and save money in order to create the necessary buffer to start a business. Great, but what kind of jobs pay that kind of money? Generally, one that requires a fair amount of education especially in the modern economy. Getting that degree is difficult and expensive. Fine, so we can take a loan to get the education necessary to get the job necessary to save the money necessary to start the business. However, then we have debt in order to repay when we need to be saving money to bootstrap. Further, the current tax proposal disallows deductions for student loan debt in addition to taxing tuition waivers for graduate students. Of course, instead of bootstrapping, we could raise money from investors in order to start the business. Great, but that's also difficult without the right connections. Where do we get them? There are actually some really good resources in a few select cities that connect business people with tech people. However, generally speaking, these connections are formed by growing up in the right communities or going to school in the right places. I received a wonderful education at a state tech school and keep in good contact with my former classmates. That said, they didn't come from money and are not a resource to draw from for investor money. On the other hand, students that go to Ivy League schools likely have a background that could raise that capital.
Anyway, that's a long response to a simple question, but I very much contend that there are significant barriers to entry for becoming successful at business. Technically, it's all doable, but the chance of that happening, especially when coming from poverty, is very small.
Alright, I run a business, so let's talk some numbers in the modern day environment. As a pass-through entity, all business income is considered personal income for the consideration of taxes. In addition, to federal income tax, which can range up to 28% for sub $100k income, business owners pay both halves of their FICA, which is 15.3%. Then, there's state income tax. Now, it's hard to just add tax numbers due to deductions, which will change with the GOP tax rules, but my overall rate last year was 28%. Of course, this doesn't cover things like healthcare. I live in a low cost area, but I pay $447 a month for a policy with an out of pocket max of $2800. That means, that I have to budget around $8k/year right now to account for medical ailments, which means that I have to account for up to a 40% loss of income when factoring in medical and taxes. What does this mean in aggregate? You need to be in a business that makes a fair amount of money before it's possible to be stable financially.
Now, is someone who comes from an impoverished situation it a place where they can generate that kind of money from get get go? Probably not. Alright, so we can then work a job and save money in order to create the necessary buffer to start a business. Great, but what kind of jobs pay that kind of money? Generally, one that requires a fair amount of education especially in the modern economy. Getting that degree is difficult and expensive. Fine, so we can take a loan to get the education necessary to get the job necessary to save the money necessary to start the business. However, then we have debt in order to repay when we need to be saving money to bootstrap. Further, the current tax proposal disallows deductions for student loan debt in addition to taxing tuition waivers for graduate students. Of course, instead of bootstrapping, we could raise money from investors in order to start the business. Great, but that's also difficult without the right connections. Where do we get them? There are actually some really good resources in a few select cities that connect business people with tech people. However, generally speaking, these connections are formed by growing up in the right communities or going to school in the right places. I received a wonderful education at a state tech school and keep in good contact with my former classmates. That said, they didn't come from money and are not a resource to draw from for investor money. On the other hand, students that go to Ivy League schools likely have a background that could raise that capital.
Anyway, that's a long response to a simple question, but I very much contend that there are significant barriers to entry for becoming successful at business. Technically, it's all doable, but the chance of that happening, especially when coming from poverty, is very small.