Nothing is certain in life besides death and taxes, so better teach your kids this lesson early on in life, says one parent.
Lance Cothern, of LenPenzo.com, charges his kids a “Parent Tax,” to teach his children early the nature of taxation.
“[W]hy should you wait until your child’s first job to teach them about the basics of earning money and taxation?” Cothern writes on his blog.
Cothern’s Parent Tax charges his children a flat-percentage tax on any money that his kids may earn or acquire. That goes for allowance money as well as birthday money.
“Some people will be up in arms over the suggestion that they should tax their children, but the Parent Tax is a tool that parents can use to educate their kids about personal finance issues,” he writes.
There are three reasons, he argues, why this is an important lesson kids must learn.
First of all, it prepares kids for their first real paycheck.
My parents didn’t impose the Parent Tax on me, so I was blindsided when I received my first paycheck and saw all of the withheld state, federal, social security and medicare taxes! I was severely disappointed. Children who pay the Parent Tax, however, are aware that taxes are a part of life and don’t expect to receive every dollar they earn in their paychecks.
It also helps kids feel like they are contributing, Cothern argues.
Raising kids isn’t cheap and most kids have no clue how much money it costs to raise them. The Parent Tax helps kids understand that housing, food, and clothing isn’t free. Kids will take pride in knowing that they’re contributing to the family.
It’s actually just a good way to teach your kids about saving.
I’m not actually suggesting that you spend the money that the Parent Tax generates. Instead, use that revenue for your child’s future. Invest it in a college fund — just don’t tell your kids until they head off to college. Then surprise them with the resulting investment account statement. They’ll take pride in knowing that they were the source of this money.
In a world where young people feel entitled to a bougie lifestyle and are mounted in an unfathomable amount of student debt, teaching your children about how money works and what taxation means is an invaluable lesson.
If all goes right, maybe children will grow up to resent taxes as much as the tea party does.
Ron Swanson explains taxes: