In 1888, in Curacao......

 In 1888, in Curacao......

A bridge was built to connect two parts of the city. A toll tax was proposed but officials wanted it to be a "progressive" tax. They decided rich people will pay more to cross.

So how to identify rich and poor quickly?

They had an idea, rich people wear shoes ( it's 1888 remember ), so they decided to charge a tax based on that. If you cross the bridge wearing shoes, you pay a tax, but if you are barefoot, you cross for free.

Simple

Easy

Difficult to avoid

Brilliant idea

But it failed.

Why?

The rich simply took off their shoes and crossed the bridge. ( Tax Avoidance )

The poor? 

They did not want to be seen as poor, so they would wear shoes or borrow shoes to cross the bridge.

This is a true story.

So what are the lessons?

1. Poverty is hidden yet visible.

2. Poverty is more in the mind.

3. Rich stay rich by spending less. Poor stay poor by spending more.

4. Humans are irrational.

5. Rich always get better financial advice.

6. Taxing the rich to help the poor sounds great but is complicated.

Ask yourself.....

Are you "borrowing shoes" to cross any "bridge?"

If you are, please stop.

And this lesson holds true in 2023 too.