Opinion and Economic Analysis

HICKS: Lessons in macabre taxes and ghastly fiscal policy

October 29, 2011

Mike HicksIt is once again that time of year when children turn either ghoulish or cute (or both). As I have noted in past columns, Halloween is the time when the Hicks kids learn about taxes. As a loving father, I combine the safety examination of their treats with a lesson on the effect of marginal tax rates on productivity.

This year, we will count out each bag of candy, and I will “tax” the first 25 pieces at a 0-percent rate, the second 25 at a 5-percent rate, and the rest at a 15-percent rate. This will help them better understand progressive taxation and reconsider how long to keep at the business of trick-or-treating as the benefits of doing so decline.

I am not entirely heartless, though, and will let them choose which candy to part with (though if they start liking Almond Joys, I might reconsider).

To no surprise, my kids fear taxes. But I carefully explain to them that these taxes “pay” for their costumes, the tennis shoes they sprint in, and the car ride to the lucrative neighborhood. It also buys a watchful eye from Mom and Dad. OK, that comes free, but it is a great metaphor for national defense.

When I explain this to my kids, they sorta get the message, but are not as grateful as they should be. My college students often suffer a similar problem.

This year, I will add a stimulus package to the game. Our household, like everyone else’s, has lots of tasks in a typical week. We have swimming, baseball, soccer, algebra, spelling, geography, piano, pets, trash, dishes and laundry. A lot of work and enlightened self-interest inspires cooperation. It is literally a small economy, though Mom often helps clarify exactly what self-interest entails (as in, “If you know what’s good for you ...”).

I dislike folding clothes. If you have been in the military, you know why. So this year, the candy taxes will be used to my advantage. By plying my kids with the taxed treats, I can ensure that I won’t fold clothes for at least two weeks. This works on only one child, though; the others turn surly, make signs and go to protests.

Unfortunately, my kids have pointed out some problems with my stimulus plan. First, they ask, “How is getting Dad out of doing work consistent with the idea that these taxes are for all our good?” Second, “How is it fair that you take money from all of us, then pay one of us to do something that you want done but doesn’t really help the family?”

These are scary questions for which I have no good answer, except that it is good being Dad. What is truly gruesome, though, is that those cute kids dressing up this Halloween will have to pay more than candy to fix the mess. That makes us grown-ups look like zombies.•

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Hicks is director of the Center for Business and Economic Research at Ball State University. His column appears weekly. He can be reached at cber@bsu.edu.

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