William A Gardner
21
May
2018
Economics
Occasional Blog
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Teaching Children About Taxes
A child asked his father about taxes. "Well," said the father. "Taxes are levied on citizens by the government to pay for all the things that Governments do." The child looked puzzled and so the father decided that a specific example would be a good teaching method. "I'll show you an example of how governments and taxes work," he said. "Come with me."
Together they went to the child's piggy bank and extracted a few dollars. Then they went off to the local ice cream shop. There the father used the money from the child's piggy bank to buy two ice cream cones, one for the child and one for himself. Outside they sat on a park bench and the father, having eaten his cone very quickly, then ate half of the child's ice cream cone as well.
"That's not fair," complained the child. "You had all of yours and then ate half of mine too."
"I represent the government," said the father. "I look after you so therefore I get to take half of what you have. It's called taxes."
"But you already had one of your own," complained the child.
"Of course," replied the father. "I have to pay for all my overhead like the house in addition to looking after you."
The child considered this for a while. Finally he said, "You took the money for the ice cream cones from my piggy bank so when are you going to put it back?"
"Ahhh," said the father. "You see, as government I don't have any money of my own, so anything I can't get from taxing you, I borrow. In this case I borrowed the money from your piggybank and will pay it back some day."
"When?" asked the child?
The father fixed the child with a triumphant look. "When I am able to take enough of what you have by taxing you, then I'll be able to put the money back in your piggy bank."
The child was clever and after another long pause his eyes narrowed and he looked straight at his father. "But then I'm paying for everything," he exclaimed!
"Exactly," said the father. "Now you understand government and taxes."
