Wow, $500 would not happen around here, it just shows how much these things vary. Maybe because the school tells us yearly that tuition must jump to keep the teacher salaries competitive; parents feel that the teachers are supported by the school, and are more likely to do thank you cards/notes/drawings than buy yet another thing for someone. You can also do a classroom gift off their wish list, $5-$50 usually, that's what ppl do at Chrstimas. (I mean, a gift FOR the classroom, not from... like books, map, art- for the room, not the teacher him/herself)
And I hope the OP just politely declined. Even here where the norm seems quite high, it's totally ok to just do your own thing! And no one should feel pressured to contribute if they had something else planned or it's a financial hardship or if they didn't like the teacher!