Spring 2014
Foundations of Taxation ACCT 3350
Professor Solcher
Student: Natasha Chou
Date: March 3rd 2014
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Toy story 2
Tax is based on individual’s ability to pay and its goal is to secure American
citizen’s life and rights. Tax is a safeguard for education, health care, social security, and
social service. Tax has become absolute essential; it has reshaped United States’
economy structure and helped the poor and minorities to improve their living conditions.
This paper is regarding to the tax issues based on Pixar production movie Toy Story 2. In
Toy Story 2, property tax, sales tax, social security tax, excise tax, and income tax are the
key tax components that are involved in the movie. In addition, each main character has
different tax responsibilities based on their actions and the their characters.
In the very beginning of the movie, the first scene was taking place at Andy’s
room. The property tax rule was involved and Andy’s mother would most likely be the
one who has to pay for property tax. Also, the chicken man’s store “Al’s toy barn” is
associated with property tax as well. Property tax could fall into two different categories,
real property and personal property. Real property includes lands, improvement of land,
equipment that are used for improving lands, things beneath the land, and things that are
fixed to the land such as houses and stores. Personal property is usually exempt from tax.
However, if the personal property is used in business then the tax rule applies and some
state governments are strictly imposing tax on personal property like automobiles and
boats. Personal property basically includes anything that is movable in the household
such as furniture, machinery, etc. In Toy Story 2, Andy’s mother and the chicken man
both have a car. Therefore, the automobile tax varies depending on the state government.
Generally speaking, each region has its own standard property tax law. In addition, the
property tax isn’t based on the true value but the assessed value of the property. The
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county assessor determines the assessed value so the assessed value of the property could
be vary between states. Also, the tax percentage varies among counties and states as well.
Furthermore, property investment cycle has also taken place in this case. The four critical
elements are initial basis, property acquisition, property disposition, and adjusted basis.
The total tax results are based on these four items plus the period of use. The good
example could be the Al’s toy burn. According to the capital recovery concept, the tax
amount could be reduced due to the initial investment the landowner has invested
initially. Therefore, it is important to calculate the adjusted basis annually because the
land value will be depreciating over time.
Yard sale so called garage sale has taken place right outside of Andy’s house.
Some states are strictly enforcing applying permits for yard sale such as Oklahoma. If
Andy’s mother did not have a garage sale permit then she would violate the state law but
the movie did not mention that part. In general, if a household has garage sale once a year
then the sale income is usually not taxable plus garage sale usually set prices a lot lower
than the original prices. However, if there is more than one garage sale a year, then it
makes the household a business and the sale income will be taxable. On the other hand,
Al’s toy barn’s customers will be the taxpayers when they purchase the toys from the
store. “A sale tax is based on a flat percentage of the selling price of a product or service”
(Concepts in Federal Taxation). Although the store was closed in the movie, however,
the sale tax rule is potentially applied. When a customer buys toys from the store, Al’s
toy barn collects the tax income from the customers for the government. The tax
percentages vary depending on the states as well. For instance, Texas use tax rate 6.25%
but the maximum rate would be 8.25%, versus New York City’s 8.875% tax rate.
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The excise tax has involved because of airplane ticket chicken man bought to
Japan and the gasoline tax. The United States government charges traveler 7.5% tax fee
for domestic flights tickets and $17.5 tax fee for international airplane tickets
(Government- Imposed Taxes on Air Transportation). The chicken man is most likely
going to pay $17.5 departure fee. In addition, the excise tax fee varies between countries
to countries. Both Andy’s mother and chicken man has a car, the fuel tax should also be
included.
In the movie, the chicken man’s job was shooting commercials for Al’s toy barn.
When the chicken man gets pay from the storeowner, the income tax has directly taken
place. The United States government uses pay-as-you-go policy for all the income
taxpayers. This means that the employers would withhold a certain percentage of the total
income for employees every period of time. Every income taxpayers are required to file
tax return by law. Whether or not the employees would receive their tax return is
depending on their annual income. In the chicken man situation, he is most likely to
receive tax refund due to its low income by working at a toy store. It is unclear whether
or not Andy’s mother has stable annual income and monthly salaries so it is
unanalyzable.
Furthermore, the social security tax is as important as income tax. Social security
tax rule is made to protect retired citizens’ rights and provide them a good standard life
after they retired. However, the social security tax also secures citizens’ medical care,
disability benefit, etc. Since the chicken man has constant monthly salary, he is required
to pay for social security tax. This is not only beneficial to elders who have retired but it’s
also a safety net for his future retirement plan. According to the “Social Security Tax
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Rates for Employees and Employers” chart in the textbook, the year of 2012’s OASDI
and MHI rate are 6.2% and 1.45%. The tax amount that chicken man has to pay will be
based on these two components. For instance, if he gets $3000 for his monthly salary
then the social security tax would be $229.5.
The highlight of Toy Story 2 is when the chicken man stole one of Andy’s favorite
toys- Woody. Later, Woody’s toy friends decided to rescue Woody from chicken man’s
hand. The chicken man has illegally obtained Woody and the federal law requires
taxpayer to report the stolen property in the same year when he or she stole the property
(Bribes, thefts and other taxable gains). The chicken man was intended to send Woody,
Jessie, horse, and Stinky Pete to a museum located in Japan. He would have gotten a
great profit out of the deal if Woody’s friend did not rescue Woody. Only if the chicken
man were lucky enough to sell the toys to Japan, then he would have to report the income
in the same year, unless he returns the toys to Andy then he would not be obligated to
report it.
At the end of the movie that Andy has gotten Jessie and the horse as his new toys.
However, the toys escaped from the chicken man’s suitcase, so Andy has gotten these
toys for free. Based on the cases in the textbook, if a person receives a free shirt or picks
up a free jersey on the street and keeps the item but has no intention to sell it, then the
item will not be taxed. So the same circumstance would apply to this case as well. As
long as Andy keeps the toys to himself than the toys will not be taxed. Conversely, if
Andy decides to sell the toys to a toy store or a friend then the income will be taxable.
In conclusion, tax affects individual’s everyday life and taxpayer should aware the
tax rules that apply to their daily life. The taxable item range is very broad, there were
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total six different type of tax involved and two different tax issues happened in the movie.
Taxpayers should understand the benefits of paying taxes. It is not only beneficial for the
government, poor people, elders, and children, but it is also beneficial for every
American citizen. Without tax, children would not have good education and good
learning environment, drivers would not well-maintained highways and local roads to
drive, and public safety would be a big problem for everyone in the community. Overall,
the invention of tax laws is brilliant, it improved and reshaped Americans’ life and people
should appreciate the safe living environment the government has provided.
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Work Cited
Murphy, Kevin, Mark Higgins, and Tonya Flesher. Concepts in Federal Taxation . 2013.
SOUTH-WESTERN CENGAGE-Learning, 2013. Print.
"Airlines for America We Connect the World." Government-Imposed Taxes on Air
Transportation. Airlines for America, n.d. Web. 3 Mar 2014.
<http://www.airlines.org/Pages/Government-Imposed-Taxes-on-AirTransportation.asp&xgt;.
MSN money staff, . "Bribes, thefts and other taxable gains." MSN MONEY . (2012): n.
page. Print. <http://money.msn.com/taxes/bribes-thefts-and-other-taxable-gains-staff>.
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