"Everybody Pays Something"

Lost amid all the insane rhetoric coming out Michelle Bachmann’s mouth since her rise to prominence (sample: “Gay marriage is the single biggest issue facing this nation today“) is a very important glimmer of common sense when it comes to tax policy.  Bachmann’s idea is for a flatter (not exactly flat) tax that simplifies the code somewhat but that, importantly, makes sure that everybody – regardless of their financial circumstances – pays something.

While I’m not exactly sure what “something” means to her, I agree with the concept wholeheartedly.

For people living below the poverty line, maybe this means paying $50 or $100 annually rather than paying zero, as almost half the country currently does.  This is not about the revenue raised nor is it an attempt to draw blood from a stone.  What this is really about is giving everyone a stake in the success of our nation and the policies used to to drive us forward.

Let me let you in on a little secret about life in general and business specifically – nothing matters more than having skin in the game.  It is the first and most powerful determinant of your levels of participation and passion, regardless of the undertaking.  Having a $50 bet on a football game between two out-of-town teams will make a multimillionaire watch it twice as closely as he would with zero on the line.

When people pay nothing, they have no stake and they behave accordingly – like outcasts, losers and no-shows.  But when people pay something – all of a sudden they care about the outcome and they behave accordingly; they show up and they compete to win.

This past April I committed to speak at a conference in San Francisco.  I had not done a lot of conference speaking prior but the subject matter was very interesting to me (investing in the agriculture boom in the public markets) so I said yes, I’d fly out there and do it.  I told Barry about it and he said, “Great, what are they paying you?”

“Nothing, they’re flying me out and putting me up in the hotel, I’m going there to learn and meet people.”

“No,” Barry said, “big mistake.”

“Why?”

“No Josh, you don’t understand.  Anytime I’ve committed to speaking somewhere for no speaker fees, the room is empty – you can actually hear a pin drop.  But when they’re paying me tens of thousands of dollars to speak, the room is packed to the rafters, people are in place an hour early waiting.”

“Okay, so what’s that about?” I asked.

“Simple, when the promoters or conference organizers put their money up, they go berserk to have it pay off for them.  They work the phones and emails promoting it like crazy.  They make sure that if they paid money for you, they’re getting mileage out of it – the room is always packed.”

Think about the mindset of someone paying nothing in taxes each year.  Granted, they are struggling to get by but the other thing is they are also very disconnected.  They have only their own survival on the line and no true feeling of pride or ownership in the society around them.  They are citizens but not owners.  They have nothing on the line in the success of the state, it becomes very unimportant to them and this shows in their attitude and in their behavior sometimes.

Law firms understand this concept, so do public companies and many private ones.  Ownership stakes are what drive the 20-year-old college dropouts at all these Web 2.0 startups to sit there coding around the clock, they’re not making any money but they have a stake in the outcome – which is even more important.

The fact that so many people in this country aren’t thinking like owners is a problem that no amount of increased taxation on “the wealthy” will solve.  We need to re-enfranchise the disenfranchised non-payers more than ever.  Even if it’s painful and politically unpopular in the beginning it will reawaken those who’ve felt like the system is working against them and without their participation for so many years.

The last thing I wanted to do this week is find myself in agreement with Michelle Bachmann but on this one point, I think her campaign is right on the money.  When everybody pays, everybody cares.