As we start getting W2s and 1099s in the mail, dreaded tax time starts creeping into our consciousness, just as we’re getting over the Christmas spending weight gain. The older I get the more I truly understand the phrase:
“It’s always something.”

Let’s at least seize the day and teach our kids what the government really does with taxes, and not just the federal government. Now, this could get sticky and political, so let’s avoid that; we’ll just turn the kids off. In this case, sticking to theory may be best. The idea is that they learn the concept. No doubt the moment they start paying taxes, they’ll form opinions about it.

In fact, this lesson, more than any other we’ve done so far, is a discussion lesson. The idea is to spark conversation about each tax topic.

1. Income tax

We’ve touched upon income tax before, but it’s an easy one to start with; the warm up. Show kids your W2s or 1009s if you’re comfortable. Show them that every penny you earn is taxed. (Let’s save deductions and write offs for another post. I will do a post on this, especially important for college students right now, because there are more college expenses considered deductible than ever before.

Try and have them guess what the federal and state governments do with income tax. Get them started with highways and police forces, and see what else they can come up with. This can be fun game. Give hints: fire trucks, ambulances, street lights, subway systems.

Ask them if they think it’s possible to track government spending with your tax dollars. Once they understand what taxes are spent on, this should create an interesting discussion. Go online and see if you can find state and federal budgets, and what the taxes were spent on.

Bring up this question: Do you think income tax money should be used for war?

2. Property tax.

Explain that this is the tax on both your land (if you own land) and your house, if you own one. (We’ll also explain in the future post that these taxes are actually deductible on your federal taxes). Explain that this tax is local and is supposed to go for local roads, local services such as snow plowing in winter.

Have them guess what else, and ask them if they think the local government, your town, does a better job providing for its citizens–spending the money better–than the federal government.

3. Retail tax.

If you’re state does impose retail tax, then here’s the discussion point: What do states use this tax for that’s different from other tax they collect? And can they guess what a state like Delaware, which has no sales tax, does to raise revenue? States need money, whether they tax or not.

The answer to the Delaware question includes: lottery tickets and a lot of parking tickets and moving violations and paid parking. See what else kids can come up with and write in. I’ll give more answers.

The whole idea of this lesson is for kids to understand that they have stake in the community, the state, the country. It’s a good reason to read the newspaper and pay attention to politics, both local and federal. It’s a good reason to vote.

They’ll look around their town a bit differently, wondering how certain services are paid for. Maybe it will even translate to your home and they won’t just think money grows on trees and that you magically provide everything.

I’m very curious about the discussions you have with your kids about taxes. Get them talking and write in!

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