Tax Notes contributing editors Robert Goulder and Joseph J. Thorndike debate the need for a tax on unvaccinated people in the United States, all in five minutes.
This transcript has been edited for length and clarity.
Robert Goulder: With the omicron variant threatening to plunge the world into another cold COVID winter, some would say it’s finally time America got tough with its anti-vaxxers … perhaps by taxing them.
We all know there are massive externalities associated with the COVID-19 pandemic, and the biggest one stems from the decision not to get the vaccine. You can guess where this is headed – the impetus behind this kind of a “sin” tax would be to capture the relevant public costs and make them private.
To help me discuss the pros and cons, I’m joined by my colleague Joe Thorndike. Joe, you know about how sin taxes work. Why shouldn’t there be a tax on the unvaccinated?
Joseph J. Thorndike: All right, Bob, I get it. This is a Pigouvian tax essentially. They can be used for any sort of market transaction where the true cost of an item – or in this case a behavioral decision – isn’t fully reflected in the price of that decision. In other words, at least some of the cost is being born by people not involved in making the decision.
But honestly, Bob, this sounds more like a fine than a tax. Isn’t it? It seems more like a speeding ticket than a true tax.
Robert Goulder: Regarding the distinction between what’s a tax and what’s a fine, I guess that’s something to take note of. But listen, we’re in a global health emergency. People are literally dying out there. I suggest we not get hung-up on distractions. You can go right ahead and call it a fine, I’m still calling it a tax.
Joseph J. Thorndike: All right, but the federal government — does it even have the power to impose this kind of tax? Would it be constitutional? Because sin taxes are supposed to be focused on products, not behaviors.
Robert Goulder: Hey, if the tax is not constitutional the federal courts will certainly tell us. And there’s a solid legal argument that such a tax would be constitutional under the Article One taxing power. Conveniently, that’s the same rationale the Supreme Court used to uphold the tax component of the Affordable Care Act a few years ago.
If I correctly recall the majority opinion, written by the chief justice, it concluded that the constitutional taxing power is extremely broad. The failure of an individual to obtain health insurance was also a kind of behavior, and the ACA tax on it was upheld by the highest court in the land.
Joseph J. Thorndike: All right, I’ll give you the Supreme Court. But let me guess, the IRS is going to be asked to enforce this new tax, right? That means that I have questions; so many questions about how it’s all going to work.
Will the IRS decide what it means to be fully vaccinated? Is the standard going to be one shot, or two, or three? Will boosters count? Is the tax levied annually? Or is it levied only when a new vaccine is required, or each time a new booster is authorized? Who is going to answer all these questions?
Robert Goulder: Well, probably not Congress. They’d likely punt on many of those details. Thankfully, we have the professional staff of the Treasury Department to write the necessary regulations.
Listen, any time Congress omits important details from the statutory text of a tax bill, it falls to Treasury to fill in those gaps through the regulatory process. They do that all the time; it’s their job.
Joseph J. Thorndike: Bob, I know you were hoping to sidestep the politics for the time being. But I don’t think you can. It’s unavoidable, especially when vaccines are already super politicized.
We know that Republicans are already much less likely to be vaccinated than are Democrats. At the end of the day, this is going to be viewed as a tax on Republicans and a tax on red states.
Robert Goulder: I want to be perfectly clear. This is not a tax on anyone’s political affiliation. I can imagine the most staunchly conservative, right-wing person you’ve ever seen … and they would not be subject to the tax, provided they got the injection. I can also imagine the most uber-lefty socialist person … who is forced to pay the tax because they refused to get the jab.
There you go. Plain and simple, it’s not a tax on your political leanings.
Joseph J. Thorndike: For a minute I will try not being snarky, and be constructive instead. What about flipping this idea around so that instead of a tax on the unvaccinated, Uncle Sam gives you a tax cut for getting vaccinated? Presumably a refundable credit.
Robert Goulder: Yeah, that’s a great idea. I suspect the behavioral response of a tax break for people who do get the vaccine is roughly equivalent to the behavioral response of imposing a tax on those who don’t. Fundamentally, what we are talking about here is the federal government paying people to get the vaccine. Arguably, that’s something we should have been doing from the very start.
There you have it, folks. A refundable tax credit for people who get the COVID-19 vaccine. Sounds like a tax break that can save lives.