Throughout my parenting years, I have encouraged my kids' belief in Santa. My sister has taken a much more religious view with her children, and sticks to the nativity story.
This past week my niece was taken out into the hallway where the teacher told her that she was not to debate the "realness" of Santa anymore because of the conflict she was causing in the classroom. Yes, she was told to stifle her religious opinions to keep the peace.
Her teacher was given a brilliant opportunity to teach, and she took a pass. I am disappointed that the teacher was not equipped to deal with the topic of differing views more effectively. Someday soon it won't be Santa they fight about - it will be about religions, politics, or gender issues. Grade school is when we need to start giving kids the language of tolerance and acceptance.
Although my sister and I sit on opposite side of the S-man debate, our kids have existed peacefully all these years because we agree to respect each other's views about the holiday. Believing in Santa does not prevent my kids from enjoying the religious aspect of the holiday. Religious beliefs do not keep my nieces from enjoying the history of the Santa story. Our kids have common beliefs in an omniscient being who knows what they are thinking (and when they are asleep or awake), and they can appreciate the magic of carefully chosen, cleverly packaged gifts (like Jesus).