Drilling Down Into The Pain

Behavioral economists tell us that people typically feel twice the amount of emotional impact from a dollar of loss as they do from a dollar of gain. So here at TaxCoach, we emphasize focusing on pain to sell tax-planning service.

You can talk to a client until you’re blue in the face about how you can save them $5,000 per year in taxes. But consumers are exposed to so many money-saving messages a day – for cars, for mattresses, for satellite TV – that it all fades into gray. Or you could tell them how they can stop wasting that same $5,000 per year in taxes they don’t have to pay. Then watch theendowment effect in action as they leap to rescue those lost dollars!

Most people feel pain at the thought of paying taxes. We all acknowledge, to some degree or another, that tax-financed government is necessary to do the things collectively that we can’t do for ourselves. We can debate whether those things should stop with national defense and interstate superhighways, or include benefits like single-payer healthcare or a guaranteed income. But at some level, we accept that some level of taxation is necessary and each of us have a “fair share” we should pay.

Having said that, nobody wants to pay more than they have to! Most of us look around at each other, knowing that not everybody pays that fair share amount, and resent the idea that we have to pay more to make up for it. And when we contemplate the tax code and regulations, it’s natural to wonder whether those million+ words include a green light or two that we’re not using to maybe pay a little less.

Back in 1789, Ben Franklin wrote that “in this world nothing can be said to be certain, except death and taxes.” (Smart guy, that Franklin. He also said “early to bed, early to rise, your girl goes out with other guys.”) But just because death and taxes are inevitable doesn’t mean you should welcome them or hasten them.

Generations of commentators have called on Franklin’s quote to debate all sorts of issues around taxes. But let’s take a look at the other half of the quote and see what we can learn from death.

So, we accept that death is certain. We’re all going to die, someday.

But . . . just because it’s going to happen someday doesn’t mean we can’t take steps to prevent it now. Did you work out before you hit the office this morning? Did you eat right for breakfast? Did you wear your seatbelt on the drive in? Have you seen your doctor in the last year? Are you taking the medication your doctor prescribes? Did you skip the running of the bulls at Pamplona? (My cousin Elizabeth’s boyfriend ran with the bulls and came home with a separated shoulder that had him missing work for two weeks.)

Your prospects do all of these things and more so that they can put off untimely death. Shouldn’t they take at least a step or two to put off untimely taxes?

So, continue to focus on pain rather than gain. But drill down a little deeper and focus on the pain of unnecessary taxes, and see your marketing and sales grow even more effective.