Two little words: Tax Day. Enough to make any adult shudder. But since taxes are an unavoidable part of life, Tax Day presents an opportunity to help your students understand the role that taxes play in a family budget – and our federal budget.
Death and Taxes
According to the old saying, the only things we can count on in life are death and taxes. The saying can’t be that old, however, because Americans didn’t actually have a federal income tax until 1913. The concept was first introduced in the Revenue Act of 1861, to help fund the Civil War, but was subsequently repealed, re-adopted, and held ultimately found unconstitutional in 1872.
It wasn’t until 1913 that taxes “stuck” – when Congress adopted the 16th Amendment. At that time, many Americans – especially the struggling farmers in the south and west – were pressuring the government to tax the rich. In 1909, President Taft proposed a 2% tax on big businesses. Congress followed suit by writing the 16th Amendment, stating that the Federal government can levy tax on all types of personal income, and does not have to divide the proceeds with the States. Although most northern states opposed the bill, eventually the amendment gained support from the 36 states required for ratification, and it became part of the Constitution.
The Significance of April 15
Congress appointed March 1, 1914, as the first official deadline for filing tax returns. In 1918, the date changed to March 15th, and then in 1955 the IRS proposed April 15th. The IRS’ official explanation was that the later date gave the Agency and Americans more time to manage this hefty administrative task. Today most economists believe the government’s real motivation was to give themselves extra time to earn interest on the tax dollars they’d collected during the prior year, before issuing refunds.
But how do we explain the fact that this year Tax Day actually falls on April 18th? By law, the IRS can’t enforce the tax deadline on a weekend or holiday, or move it earlier. In the District of Columbia, April 16th is Emancipation Day – a holiday honoring Lincoln’s 1862 law freeing Washington, D.C. slaves. When April 16th falls on a weekend, Emancipation Day is celebrated on the closest Friday or Monday. The official Tax Day then has to change, to avoid falling on the federal holiday. In 2017, April 15th is a Saturday and the 16th is a Sunday. Therefore, Emancipation Day will be celebrated Monday, and we’ll have until Tuesday the 18th to file our taxes.
We may feel we are at the whim of the IRS, but it has enacted rules for itself as well. If they don’t mail your refund to you within 45 days (after Tax Day) they must pay you interest.
A Fun Way to Teach Elementary Students about Taxes
Here’s a simple and inexpensive exercise you can conduct with your class, to promote interaction, and teach students about budgeting. You can customize this activity to fit your students’ age level and interests.
Step 1 – Prepare for Tax Day by collecting a large supply of Monopoly money.
Step 2 – To begin the exercise, write a variety of job titles on the board and ask your students to select one for themselves. For example, your list might include: Doctor, Teacher, Policeman, Computer Programmer, Research Scientist and Government Leader. Select any titles you want, based on student interests, or recent class assignments, but be sure to include a government option.
Step 3 – After students have selected their jobs, write corresponding salaries on the board next to each title, using loose approximations and round numbers. Then hand out Monopoly salaries to everyone except those who chose Government. Those students will collect taxes from the others, and use it to determine a government budget.
Step 4 – Explain the general concepts and math behind income taxes, and then tell your students that it’s time for them to pay their 2016 taxes. For the sake of simplicity, enact a flat tax of 10%. If your students are too young to do the math, do the calculations for them on the board.
Step 5 – Instruct the Government group to collect the taxes from all the “citizens.”
Step 6 – Assist the Government students in devising a budget for those tax dollars. Conduct an open class discussion, fielding suggestions for necessary expenditures, such as roads, education, a police force, etc. If your students are old enough, you may want to introduce the concepts of subsidies and welfare.
After the Government students have allocated all the tax revenue, you may also choose to address deficits, by suggesting a line item they forgot. For example, did they allocate for the military (by far our country’s biggest expense)? Is there money for Medicare and Social Security? Did they remember to pay their own salaries?
This exercise presents a lively and hands-on approach to helping students grasp the significance of Tax Day.
For more educational resources and ideas for Tax Day:
Editor's note: This article was originally published April 12, 2017.