Government

Parents, If You Seize Your Children's Halloween Candy, It Might Not Be A Good Idea To Call It A Tax

Using candy to explain taxes to children could lead to complications. Peel a Butterfinger or two and take a read.

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By the time you read this, you may have already taken your children out trick or treating. When you got home, hopefully, they had more candy than they knew what to do with. In cases like this, most parents let the child keep only some of the candy while the rest is taken away.

The real reason parents do this is so children won’t spoil their appetites or get sick from eating too much candy. But some parents try to use this opportunity to teach their children about income taxes.

Parents’ taking of their kids’ candy is obviously not the same as paying taxes. But the reasons for doing so have some parallels to tax policy goals. While this is done mostly as a joke, will the kids see it the same way?

Some parents’ determination as to how much candy to take is similar to a progressive income tax system. For example, if a kid had a bad night and didn’t get a lot of candy, the child will probably be allowed to keep the entire stash. Or the parents might take the child to the candy store as a way of awarding credit for having tried to earn the candy.

On the other hand, if the kid got a massive candy haul due to luck, extra effort, or both, the parents may feel that it would be inappropriate to let the child keep everything. They think that the child will get tired of eating sweets frequently. Or letting the child keep everything will make them greedy. And eating too much candy will make him sick.

But most parents see themselves as absolute monarchs and will just take the candy at whatever arbitrary rate they see fit.

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The collected candy will be stored away. Most will be saved for later. Or handed out when the child has a bad day.

The parents could also decide that it would be better for everyone if some of the excess candy is shared with others, similar to the way governments share the wealth. Grandma and grandpa will be the first to get some. But the kids are told that when they get old, their children and grandchildren will do the same for them. And, of course, parents secretly steal (er, repurpose) some of the candy for themselves.

The parents also might want to give some candy to the neighbor’s children because they were too sick to go trick or treating. Perhaps the parents felt bad for them and simply wants to help. But they could also be doing this to get on their neighbors’ good side, with an expectation of something in return.

The child could be allowed keep more of the candy if some if it will be used for specific purposes, such as taking the candy to school and sharing it with classmates or because a doctor prescribes candy to help the child concentrate and study. Maybe the child agrees to store the candy somewhere to be eaten after a predetermined time has passed, but if the child sneaks them out early, they will be punished. Since most candies have expiration dates, some will have to be eaten before it spoils.

Those are some of the ways taxes are similar to parents confiscating and managing their kids candies. But here are some differences that are pretty obvious.

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The first difference is that the government will not accept candy as a form of payment for taxes. Taxes are paid with money. This is because there are various types of candy, each with different values. A child cannot pick and choose which candy to give up for taxes. Similarly, the tax agency cannot pick and choose which candy is acceptable payment. For similar reasons, the IRS will only accept the U.S. dollar as payment and not the Zimbabwean dollar or “World of Warcraft” gold pieces.

Another way taking candy is not the same as an income tax is because candy and tax money are used for different purposes. Governments exist to benefit their citizens generally by providing social services and maintaining order. This can be done with money but not with candy because candy is a generally a consumption good while money is a medium of exchange that can purchase a variety of other things. So, can a parent use a child’s seized candy to benefit the household? Probably not, because candy’s main purpose is to be eaten and enjoyed. The light bill and the mortgage cannot be paid with candy. The piano teacher and soccer coach won’t accept candy as payment either.

Again, the parents’ “candy tax” is done as a joke and if the child has a sense of humor and some level of willpower, the sting of the loss will be lessened.

But if the child is particularly traumatized by the take, it could give him or her the wrong impression of taxation at an early age. They will start to get the impression that taxation is theft, arbitrary, and used as a bullying tool. Some adults still have this belief, usually when the party they hate is in power and passes some warfare or welfare spending policy they disagree with. While most people will just grudgingly pay the tax, some will take their protest to the next level, which usually ends in fines and possibly even prison time.

So parents, if you take your children’s Halloween candy, do it using your absolute power as a parent. But be careful when trying to justify the taking by calling it a tax. Teaching tax is in some ways like teaching sex. If not done correctly and at the proper time, it could lead to misunderstandings.

Steven Chung is a tax attorney in Los Angeles, California. He helps people with basic tax planning and resolve tax disputes. He is also sympathetic to people with large student loans. He can be reached via email at stevenchungatl@gmail.com. Or you can connect with him on Twitter (@stevenchung) and connect with him on LinkedIn.

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