Evaluting a New Position Before Moving: Example of Bad Tax Policy

Before moving to a new position, Sun Tzu's strategy teaches that you have to evaluate that position from the perspective of where it leads. The idea is that we don't want to get into a position that is either hard to defend or from which it is difficult to escape in the future. Unfortunately, in reacting to events, most people are not in the habit of thinking about the next move just getting out of their current situation. This is especially true of the political class.

For example, Senator Obama's tax cut for "95% of Americans" is not a tax cut since 30-40% of the population doesn't pay federal taxes. It is an income redistribution plan. Like Robin Hood, it seeks to take tax money from the rich and give it to the poor. That sounds like a good deal for the poor, but it isn't because it puts them in a position from which escape is difficult. If poor people earn more, it punishes them by taking away their benefits. The picture is on the right (from a great article at the TaxProfs Blog). As you can see, this program discourages both the most productive and least productive people from producing more by taking away an increasing percentage of their next dollar. This hurts society by discouraging society’s most productive people, and it hurts the poor by discouraging them from moving up.