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 would pay more to cross. So, how to identify rich and poor quickly?
They had an idea, rich people wear shoes, 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 The poor? They did not want to be seen as poor, so they would wear shoes or borrow shoes to cross the bridge.
Lessons learnt.
1. Humans are irrational.
2. Taxing the rich to help the poor sounds great but is complicated.
3. Rich stay rich by spending less.
4. Rich always gets better financial advice.
5. Poverty is hidden yet visible.
6. Poor stay poor by spending more.
7. Poverty is more in the mind.
Ask yourself….. Are you “borrowing shoes” to cross any “bridge?”
If you are, please stop.”