It’s crazy to think that on average, 33% of Americans’ yearly income is taken by all types of taxes. For high income earners, that total tax could be 50%+.  

It can be overwhelming for business owners. One thing we can do to mitigate or defer paying taxes is to consult with our CPA, tax/attorney, tax consultant, or financial planner.  

Even with all the professional help available to us, there is a hidden tax that was never passed by any federal or state government. For most folks, it’s a huge tax. But for savvy folks, it can be nearly nonexistent. It’s called the “tax on trust" (or  low-trust tax ). It’s a concept from Stephen Covey’s book  The Speed of Trust  that describes the hidden financial and operational costs incurred when trust is low. 

For body shop owners/managers, we see this everyday with insurers. As we all know, this is just over the top anymore. They require detailed estimates or even squeal if we don’t do their job for them and rekey. Then we must add line notes, multiple-labeled photos, OEM repair procedures, P-page screenshots, parts invoices, paint invoices, and the list goes on. Some shops have gotten so fed up that they’re adding $150-250 admin fee for all this baloney. Go team!!!  I totally get it, but one little caveat to all this time vampire activity: even though the percentage is low, some shops are just crooks. These folks have no integrity and now ALL shops are paying this “tax on trust” to get paid by insurers. Disclaimer: Even with all documentation provided, many insurers still deny paying for everything required to do a safe and proper repair.  

Dealing with insurers is just one part of the “low-trust tax.” How about trusting employees? In Covey’s book, he talks about the Smart Trust matrix and its four quadrants:  

1. Gullibility/Blind trust: This is where the “suckers are born everyday” live.

2. Judgment/Smart trust: This is where good business judgment, good people judgment, enhanced instinct and intuition live.  

3. Indecision/No trust: People here don’t trust anyone, and often do not trust themselves. They live in indecision, insecurity, protectiveness, apprehension, and even immobilization.  

4. Suspicion/Distrust: These folks trust themselves but rarely extend trust to anyone else. If they do, it's only by their own evaluation and decision. 
Surprisingly, according to Covey, the highest “low-trust tax”  is paid by those with Suspicion/Distrust. These folks analyze everything to death – which ends up decreasing speed and increasing costs. They miss out on many opportunities. The ideal quadrant to live in is # 2, Judgment/Smart Trust. These folks understand the high value of time, and it can’t be wasted on the “trust tax” of, for example, micromanaging employees.

“You may be deceived if you trust too much, but you will live in torment if you don’t trust enough.”— Author Frank Crane 

In 2003, Warren Buffett made a deal to buy McClain industries for $23 billion from Walmart. This happened only after a two-hour meeting and a handshake with Walmart’s executives. The deal closed 29 days later with no due diligence. Obviously, Warren Buffett has lived his entire career in quadrant 2. Judgement/Smart Trust. When Buffett looks to hire an employee, he looks primarily at two crucial attributes, integrity and intelligence.  Any individual with only one of these attributes is of little value to Buffett; it’s just that simple, and owners/managers should take notice here.  

I have even seen business owners who remain a one-man show for decades. These folks may have had an employee or two over the years. Then they were most likely “burned” by living in quadrants 1, 2 or 4, along with missing the key attributes of integrity/intelligence before hiring in the first place.   

At the end of the day, we each need to be sure that someone else is not paying a “low trust tax” for our inability to be trustworthy. Just do the right thing, always. “There are no moral shortcuts in the game of business – or life. There are, basically, three kinds of people: the unsuccessful, the temporarily successful, and those who become and remain successful. The difference is character.” — Author Joe Huntsman, from “Winners never cheat.”