Gamernomics and Income Taxes

The Trump tax cuts resulted in most consumers having less funding withheld for taxes in 2018, which meant smaller tax refunds in the spring of 2019, when there was any refund at all.  It's a paradoxical outcome from a reduction in tax burden that got distributed over 26 or 52 disbursements, rather than a portion of a greater tax burden being refunded and landing in peoples' mailboxes (or direct deposits) all at once.  We paid less, but didn't feel the difference.

My situation was in line with the mainstream; small business taxation affords us some shelter mechanisms to help offset the obnoxious self-employment income tax, and I still ended up owing taxes for 2018 and sending in a check last week.  The IRS is spinning tales of there being no refund reduction in aggregate, but the anecdata from the front lines says "lol whatever."

Anyway, without tax refunds coming in to many gamers, we saw a distinct reduction in big-ticket purchases this spring thus far, from what had been a fairly dependable draw and one of the few positive effects offsetting retail's conventionally slowest quarter.  Can't buy that Playstation 4 if you had to send the Treasury a check instead of receiving one.

This is in line with gamer-demographic economics generally.  While tabletop fandom runs the gamut from young children to students to young adults to parents and even to senior citizens like yours truly these days, I find a reasonably common average to be something like: Gamer in their late twenties, earns $30k/year, single, struggles with credit card and student loan debt, rents an apartment, has a car payment, and is otherwise reasonably thrifty just by the default of having no real choice in the matter.  Because tabletop (aside from Warhammer) has become more gender-diverse, let's call this exemplar average gamer "Kelly."

Kelly brings in $2500/month gross, after taxes about $800 per paycheck.  After debt service and food, Kelly has maybe $100 per week to spend.  While small purchases like tournament entry, 3-for-$10 boosters, and premium sleeves don't wreck this budget, an occasional booster box is a significant chunk, more than the weekly discretionary makes possible.  Something like a new console, a Warhammer army, or a Masters booster box goes right onto the credit card and prolongs the eternal interest service. It shouldn't be a shock if many Kellies spend much less than $100 per week, especially in terms of more mainstream product mixes.

Twice per year or thereabouts, there's an additional pay period in a month due to the progression of two-week increments.  Kelly feels like they hit the jackpot during those times because it's basically a fully "extra" paycheck on top of the monthly cycle.  If Kelly is having reasonably low stress in the rest of their life and is feeling particularly responsible, they might use the extra ~$800 as a chance to jump two weeks ahead of the bills cycle, or even kill off some credit card debt.  More likely, it becomes another of those rare opportunities for Kelly to splurge on games or cards.

It's not difficult to see why Kelly might not change behaviors all year long if their biweekly direct deposit was $880 instead of $800, even though this meant a whopping $2000+ smaller tax refund.  The ingrained habit in Kelly's money management is to spend most of what they have, week in and week out.  Until some sort of career advancement occurs, it's tough to imagine Kelly breaking free of this wage cage, despite the door being openable.  This means the forced "saving" and refund of higher taxes actually provides Kelly with something of an inefficient, involuntary annual mini-windfall.

It becomes easier to recognize why Kelly lives from deck to deck and trades in any Magic cards they aren't using in a deck right freaking now rather than sticking to by far the best EV practice of buying the cards one wants to play with, and keeping them.  It becomes easier to recognize why Kelly becomes a console fanboy; they can't afford all three.  Two at most until late in the generation when all the price cuts have come in.  And Kelly has to trade in all the previous-generation games and gear just to muster up enough cash to get into the current stuff.  To the extent that Kelly has kept any retro stuff around, it's either a nice trade-in or something they'll hold onto for the long run.

Lest you think I'm being judgmental, be assured I am not, because I was Kelly for many years in my twenties, and millennials who are Kelly today are burdened by an even more formidable array of expenses than I was.  My point in explaining Kelly's outlook is to illustrate that as a business, I need to craft my processes and economics around the needs, wants, and resources of a clientele of thousands of Kellies.  (And some number of younger or older clients, and some with less resources and some with more.)  Which means when Kelly doesn't get their annual Splurge Fund, it's my job to know that money isn't coming, and to avoid ordering deep on big-ticket merch out of distribution.  It won't affect buys much, since I'll take just about anything that comes in.

Distributed costs like taxes tend to ratchet; the colonists were ready to revolt over a matter of "taxation the tenth percent of what a man earns" and today even those who get most of their federal or state taxes refunded are paying far more than that in a combination of sales tax, payroll tax, property tax, social security (which we all know ain't gon' be there when it's our turn) and so on.  Even when Republicans are passing tax cuts, it never peels back substantially below earlier increases.  Accordingly, in those rare cases when taxes go down,  Kelly (and the rest of us) are at liberty to max out our withholdings on our W-4 and [State]-4 forms if we want to use the tax cycle as an annual savings fund.