Imagine you’re at a poker table playing Texas Hold’em. There are three players:

• Player 1 knows the rules, plays cautiously, folds on bad hands, and bets smartly when holding strong cards.
• Player 2 plays aggressively, bluffing occasionally but sticking to a clear strategy.
• Player 3, however, folds pocket aces (the best starting hand) and bets heavily on weak cards.

Everyone at the table is confused. Player 3’s moves seem irrational. Throwing away winning hands and wasting chips on hopeless ones. But here’s the truth: Player 3 doesn’t actually know the rules of poker. Player 3 is actually great at playing Uno but it does not help at this table. They’re not stupid, they just don’t understand how the game works.

Now, imagine the other players are speaking a language you don’t know, like Chinese. You however make a lot of words and laugh randomly. To them, your strange sounds might seem just as foolish. But the problem isn’t you, it’s that you’re trying to play without knowing the rules or the language.

This is exactly how most people approach taxes and financial systems. They’re trying to navigate a high-stakes game without understanding the rules, leading to poor decisions and lost opportunities. Let’s change that.

The Players in the Tax Game

The tax system is much like the poker table. To succeed, you must understand the players:

1. The Government
   • Role: Rule setter and enforcer.
   • Goal: Collect revenue while incentivizing behaviors that benefit the economy and society.
2. Businesses and Individuals (You!)
   • Role: Active participants.
   • Goal: Maximize value (profits, income, and savings) while minimizing costs (taxes, compliance efforts).
3. Stakeholders (Society, Competitors, Investors, etc.)
   • Role: Observers and influencers.
   • Goal: Shape the environment and influence how rules evolve.

The Rules of the Game

Taxes and financial regulations are the language of this game. If you don’t understand them, it’s like being at the poker table without knowing the difference between a full house and a bluff. Key rules to keep in mind:

1. Governments create rules to incentivize behavior.
   Tax breaks for green energy investments or small businesses are designed to encourage actions that align with public policy goals.
2. The game is always changing.
   Tax laws evolve with political, social, and economic shifts. Staying current is critical.
3. Success requires strategy.
   Winning players don’t just comply, they optimize, using the rules to their advantage.

Why People Lose the Tax Game

Many people are like Player 3 in poker not because they’re incapable but because they don’t understand the rules. Here’s how this plays out:

1. Folding on Winning Hands:
   Missing out on deductions, credits, or incentives they qualify for, leaving money on the table.
2. Betting on Weak Cards:
   Making financial decisions without considering tax implications, like selling investments at the wrong time or ignoring tax-efficient savings options.
3. Not Knowing When to Call:
   Failing to act strategically when opportunities arise, like deferring income to a lower-tax year or reinvesting profits into tax-advantaged projects.

Designing Your Winning Strategy

To win the tax game it’s about playing smarter within them, not bending them. Here’s how to design a strategy that works:

Step 1: Educate Yourself

The first step to mastering the game is understanding the rules. The fastest way to do this is by finding a mentor, someone who knows the system and can guide you. Ask your network for recommendations before turning to a random online search. While self-education is an option, it’s often inconsistent and time-consuming, and you risk focusing on things that aren’t relevant to your situation.

Step 2: Make a Game Plan

Work with your mentor to create a customized game plan. This should include:

• Identifying key opportunities in your tax situation.
• Setting goals for minimizing liabilities and maximizing benefits.
• Preparing for future changes in the rules.

Step 3: Implement Your Strategy

Once your plan is set, take action. Execute the steps outlined by your mentor and track your progress. Regularly review and adjust as needed to stay aligned with your goals.

Bonus Step: Help Someone Else

If you find success, extend a hand to another entrepreneur or individual. Teach them how to play the game better. The more players who understand the rules and play strategically, the more rewarding and fun the game becomes for everyone.

Just like in poker, ignoring the rules of taxes and financial systems leads to predictable consequences:

1. Penalties and Fines:
   Missteps can result in audits, back taxes, and hefty penalties that drain your resources.
2. Missed Opportunities:
   Failing to use tax-efficient strategies leaves money on the table that could have been reinvested into your life or business.
3. Increased Stress:
   Operating without a strategy is exhausting and unsustainable. Knowledge and planning bring clarity and control.

When you educate yourself, create a plan, and implement it strategically, you stop being a passive participant and start winning.

3 Quick Questions to Get Started:

1. Are you fully aware of the tax rules that apply to your situation?
2. Do you have a mentor or advisor helping you navigate the system?
3. What’s one step you can take today to optimize your strategy like reviewing deductions or asking for professional advice?

One thing I think is important is that the tax game isn’t about outsmarting others.

It’s about playing a better game with the tools it gives you.

Master the rules, play with purpose, and design your winning strategy.

And like Simon Sinek put it, this is not a single game you play once but an infinite game and if we know we will play this a long time I think we want to have fun doing it.

Rickard

Ps. Full disclaimer. I am by no means a tax guru of any sort and don’t claim to know how to play this game the best way at all. If we were playing Poker I am still at the level of playing Uno.