My shove into the world of taxation didn’t come after a quaint summer job as an awkward teen.
Instead, I learned about taxes as a five-year-old girl on Halloween night.
Dressed in a dapper Peter Pan outfit, my five-year-old self bounded into the house. Nursing a little bit of a sugar rush, I gleefully dumped my candy loot on the floor.
As the family dogs came running to inspect both the noise and smell, I threw my body over the colorfully wrapped treats as if my life depended on it.
Thankfully, the dogs quickly lost interest, and I relaxed my stance to take stock of my inventory, hoping I’d received a ginormous supply of Milky Ways, Twix and Snickers.
Little did I know a much larger threat cast his shadow over my hard-earned candy.
As I began organizing my sweet treats, an arm reached from behind my shoulder and snatched a fun-size bag of Skittles from my pile.
“Hey!” I yelled indignantly, “That’s mine!”
“Candy tax,” my Dad said.
“What?” I sputtered, trying to jump up and grab the bag from his hands before he could down the treat in one mouthful.
“Well, you were able to go out trick-or-treating because your mom and I took you and your sister. So, we should be able to enjoy some of the treats,” he explained, an amused look in his eye.
Obviously, my four-year-old brain didn’t entirely understand the complexities of taxation (although this definitely felt as if it were without representation), but it laid the groundwork for future financial conversations.
Plus, it ensured my parents got easy access to our Halloween candy every year.
Why impose a candy tax
Telling a child the only two guarantees in life are death and taxes may be an appropriately terrifying expression for the Halloween season. But it’s probably not the most relatable or appropriate statement to make when trying to build the foundation for a money-savvy kid.
Instead, imposing a candy tax provides a simple way for parents to start explaining such an important financial topic to children in a way that is relatable.
By levying a candy tax against your child’s trick-or-treat loot, you can help them experience the emotional roller coaster of forking over part of what they earned to a larger entity.
How to tax and teach
Simply stealing a bag of Skittles and calling it a candy tax probably isn’t the strongest approach to a lesson in taxes. However, with the right strategy, it’s a great way to start financial conversations early.
To help you execute this plan flawlessly, here are a few steps to follow:
Step 1: Once the child dumps the candy out on the table, let them evaluate it for a minute.
Draw a correlation between the haul of candy and how mom and dad go to work each day to bring home money. Similar to trick-or-treating, there’s an action done in exchange for a good.
Step 2: Now it’s time to mention cutting a check to Uncle Sam.
Pick up a piece of candy (preferably a decent piece like a Snickers and not an orange flavored Tootsie Roll) and explain that when mom and dad earn money some of it goes to the government as a tax.
Step 3: Be sure to explain what taxes are used for.
If your child is in public school, perhaps mention taxes help fund school books and lunches or that the streets you drive on are maintained using tax dollars.
You could even mention that community services like the local library are supported with tax dollars. Using specific examples of what your child interacts with will make it an easier concept to understand.
Step 4: Now it’s time to drop the hammer. You are the government and your child is the tax payer.
Because you helped purchase and/or make the costume, and you went out to supervise trick-or-treating, your child should be willing to give up some of the earned candy for the collective, greater good. (In this case, the “collective, greater good” being your taste buds.)
Step 5: Brace yourself for some backlash!
You’ve probably seen the Jimmy Kimmel Halloween prank where parents pretend to have eaten all of their kids’ candy. This may not be much different.
You could end up with a screaming six-year-old dressed like Captain America and hopped up on sugar.
Step 6: Keep it up year-after-year.
Use this method as a foundation upon which to have other financial conversations.
As your child gets older, the conversation will continue to evolve. Eventually, you’ll start having more sophisticated discussions about not only taxes, but other important financial topics. Help them further learn about taxes in ways such as showing them tax calculators and articles on how to plan for taxes.
Taking advantage of teachable moments like this will help your mini-mes jump-start their way to becoming financially responsible.