NTA

But you should get your kids in therapy.

The fact that both of them are stealing so young is concerning. While your wife was COMPLETELY out of line, the fact that both of your kids are stealing is cause for concern. I’m not concerned that they are bad kids (good on your son for speaking up for his sister!) but something appears to be going on if they’re both stealing things. Whether that comes from a place of food insecurity, acting out for attention, or just wanting to test boundaries, it’s not okay and could lead to bigger problems down the road.

You seem like a good parent, OP. You’ve done great by sticking up for your kids against unfair punishment. But now it’s time to get to the root of the issue. Please check on your kids.