Tax incentives can encourage action that supports the public good—like lifting children out of poverty, giving to charity, pursuing higher education, or using alternatives to fossil fuels.
How about helping end a global pandemic?
COVID-19 has weakened economies and killed more than 3.1 million people worldwide, with over 575,000 deaths in the US alone. Without question, stopping the pandemic is in the public interest, and mass vaccination is a surefire way to stop it. But vaccination rates are only at about 50 percent, well below the likely 80 to 90 percent COVID-19 immunity rate we must achieve, either through infection or vaccination.
Should government use individual income tax incentives to boost vaccinations?
The American Rescue Plan (ARP) already entitles small employers to a refundable paid leave tax credit though September 30, 2021. But what if the federal government paired the employer credit with, say, a refundable tax credit available to individuals who are vaccinated during that time?
After all, businesses are rewarding their customers…
My husband and daughter got vaccinated at a drugstore, which rewarded them with 20 percent-off coupons. Other vaccinated people around the country are getting donuts, hot dogs, and even beer. Here in Michigan, where recreational marijuana is legal, a vaccine gets you a pre-rolled joint from one dispensary. (Full disclosure: I was vaccinated by our regional hospital. All I got: A vaccine card holder and a sticker.)
And some state and local governments are offering money…
Still, vaccination rates remain lower than ideal, in part because people are reluctant to get the shot. And governments are getting more aggressive. West Virginia will give a $100 savings bond to residents age 16-35 who get vaccinated. The District of Columbia is exploring incentives for public safety and health-related employees to get vaccinated. The Detroit Public Schools Community District is giving one-time $500 bonuses to educators and other eligible staff.
What do some fellow taxpayers (a dozen of my friends) think of a tax incentive?
With so many unwilling to get vaccinated in Michigan, I asked friends whether the unvaccinated should get a tax credit or rebate for COVID-19 shot. Only one person liked the idea: “Yes! Whatever it takes to get people vaccinated so we can end this pandemic!”
The passion with which a few others answered surprised me.
“No [expletive] way.”
“I drove three hours last month to get my vaccine. I didn’t get a tax credit. Why should we reward people for doing the right thing?”
“Could we stop asking the tax code to fix everything? As if people will suddenly get vaccinated because of a tax credit… It’s not like they’ll get it as soon the bandage is on their arm.”
Congress would have to develop, debate, and pass a credit, then the IRS would have to administer it. Would the credit apply only to future vaccines? That would give unvaccinated people another reason to wait. And if everyone gets a credit, the government would be wasting money rewarding people who already got their shots.
And, given the lag between getting the vaccine and probably not seeing the credit until people file their 2022 tax returns nearly a year from now, is it the right kind of reward?
A nursing home operator told my TPC colleague Howard Gleckman that he used lottery tickets to encourage his staff to get vaccinated. The key: As soon as they got the shot, the reward was in their hand. The operator felt the lottery ticket was a far more effective than a cash bonus in the next paycheck a week or two later.
One health care professional who advises governments on state and local COVID-19 response strategies doesn’t favor financial incentives beyond giving people time off to get vaccinated. He offered a few key reasons.
First, in general, a financial reward could change a social act into a mere transaction and be coercive of lower-income populations. What if they really needed the money and felt it left them no choice but to vaccinate? Second, people who already have been vaccinated may need booster shots. Will everybody be eligible for a booster tax credit next year? Third, people may trust a vaccine even less if the government pays them to get it.
Exacerbating the issue: It could also be that incentives reward only the already willing… that old “lead a horse to water” trope. No reasonable payment may be enough to motivate those who are strongly vaccine resistant.
A recent skit on NBC’s Saturday Night Live maps the difficult road ahead. Academy Award winner Daniel Kaluuya plays a physician-gameshow host who challenges his unvaccinated relatives to answer a question about the COVID-19 vaccine. The name of the show: “Will You Take It?” (Spoiler ahead.)
Their answer was “No.” Not for $500. Not for $5,000. Not for $10,000. Not for $20,000. Why not? Several reasons, including an acute awareness of systemic racism and the unfortunate spread of misinformation, but mainly: They simply didn’t trust the government.
Tax policy can do a lot to support the public good, but only if you trust the government that makes it.
The Tax Hound, publishing once a month, helps make sense of tax policy for those outside the tax world by connecting tax issues to everyday concerns. Have a question or an idea? Send Renu an email.