There are various versions of the benefit principle of taxation. One is the James Buchanan/Knut Wicksell version, which says that to get unanimous agreement for a government expenditure, you need to have people pay an amount in taxes that is less than the benefit they perceive.
That’s not what former NBA player Charles Barkley articulates but nevertheless he does state a reasonable version of the benefit principle.
Barkley said yesterday that NBA, NFL, and NHL players should get the vaccine right away because of the huge taxes they pay. He stated:
As much taxes as these players pay, they deserve some preferential treatment.
When Kenny Smith challenges him by saying “the amount of money you make” and then trails off but is clearly about to say that one’s income shouldn’t be a consideration in when one gets the vaccine. But Barkley stays on message saying, “I said taxes; I didn’t say the amount of money you make.” Kenny’s making the point that those are highly connected but Charles is right to keep it focused on his point. This is something that taxpayers paid for, players in those three leagues pay a lot of tax per person, and, therefore, they should bet preferential treatment.
There are two other reasons to give them preferential treatment.
First, as my Hoover colleague John Cochrane emphasizes, it’s important to get the vaccine early to those who would be superspreaders. The players are virtually all young and many of them have active social lives. So, simply from the externality viewpoint, they should get preferential treatment.
Second, and I think this is a weaker argument, various state governments have dictated the various things we can’t do together. One of the ways left is TV. We hear every day about this or that game that is postponed because of players having tested positive. My own Golden State Warriors won’t be playing tonight against the Phoenix Suns because of “ongoing contact tracing” of the Suns. More games; more entertainment; lower loss from the lockdowns.
Finally, note that if vaccines were allowed to be sold on the market, almost all players would have them by now and, of course, so would other people now in the queue. The slowness of the queue is due to government.
HT2 Tyler Cowen.
READER COMMENTS
AJ
Jan 15 2021 at 8:57pm
I wonder why Barkley chose to appeal to that fact – the amount of taxes one makes – as justification for preferential treatment. What is it about that fact that makes it a valid binding claim and why was it chosen over any other random fact that could have been appealed to, such as ones age or health or ones sports stats or anything else? Why THAT fact? These are rhetorical questions but something I think of often when I hear someone making a moral argument by appealing to some random fact as its justification.
David Henderson
Jan 15 2021 at 10:41pm
You wrote:
I thought I answered that by saying that it’s a version of the benefit principle. But maybe my wording was too “shorthand.” A version of the benefit principle is that people who pay the most for government should get the most.
AJ
Jan 16 2021 at 6:44am
Thanks, David. I’ve never heard of that principle until I read your post so I’ll do some reading on it to learn more.
David Henderson
Jan 16 2021 at 11:22am
You’re welcome, AJ.
There are various versions of the benefit principle. If you look into it by reading the works of James Buchanan, a step I recommend on other grounds, you won’t find the Charles Barkley version. Here’s a link to much of Buchanan’s work.
When I conceived of this post, trying to find a statement from Buchanan that lined up with Barkley’s, I couldn’t. So I called Buchanan excerpt and aficionado Don Boudreaux, he told me that they don’t line up.
Thomas Hutcheson
Jan 16 2021 at 7:53am
The benefit principle is one of the justifications of progressive taxation and one that perhaps would justify progressive income taxation v progressive consumption taxation. I think, however, that declining marginal utility of consumption and that individual utility is partly determined relative to the consumption of others are stronger arguments for progressive consumption taxes.
Strictly commercial distribution of the vaccine (although possibly better than the actual system if covered by by universal health insurance) would not be strictly optimal unless people could be motivated to take proper account of the benefit they bestow on others (as with wearing masks and social distancing) by being vaccinated.
The tax-paying criterion would not stack up well compared to a roughly QALY-adjusted spread-minimizing criterion and would probably be even more difficult to administer.
BC
Jan 16 2021 at 5:19am
I guess the way to understand the Benefit Principle is the following. Suppose A and B were completely identical: same income, wealth, etc. If A paid more than B in taxes, then we might expect on fairness grounds that A should receive more benefits than B in exchange for those higher taxes.
Now, of course, with income taxes if A pays more than B in taxes, then it’s quite likely that A has higher income and may be wealthier than B. Then, the question becomes whether we should treat A worse than we would have otherwise simply because A happens to be wealthier.
John T. Kennedy
Jan 16 2021 at 9:38am
“I wonder why Barkley chose to appeal to that fact – the amount of taxes one makes – as justification for preferential treatment.”
Motivated reasoning, it supports an outcome he favors – he supposes it will get the NBA back on track. Doesn’t mean it’s not a justification.
Juan Manuel Perez Porrua Perez
Jan 16 2021 at 1:20am
Inmates in prisons are more at risk.
john hare
Jan 16 2021 at 5:32am
Possibly true. I seem to recall hearing that some state was going to inoculate prisoners with high priority. Context was the outrage that criminals would have priority over LEO or granny. There are some hard moral questions associated with your point.
Juan Manuel Perez Porrua Perez
Jan 16 2021 at 1:54pm
My point is that instead of using a criterion like moral worthiness or who contributes more or less to GDP or to the federal budget or who is more willing and able to pay, the criterion to distribute COVID-19 vaccines should be NEED: who is more at risk of getting and spreading COVID-19? who needs to be vaccinated so that the spread of COVID-19 slows down? Also, another point, is that, morally speaking, I believe, everyone, EVERYONE, has a right to be vaccinated in order not to get COVID-19 and everyone also has a duty to be vaccinated not to spread COVID-19 to others. Finally, this needs to be done fast — like really fast. These things are just the kinds of things that markets are not good at accomplishing.
john hare
Jan 16 2021 at 4:32pm
It’s actually something markets are extremely good at accomplishing, when they are allowed to operate. That is not the case with this Covid vaccine where various government agencies are making the calls. How do you think the drug companies would have responded if the governments had issued an edict that they could do challenge trials and early inoculations without fear of legal repercussions? During and after which they could have sold on the open market for whatever the market would bear? I would have been willing to pay $1,000.00 last July at higher risk instead of waiting my turn maybe next July. There are millions of people that would have paid that or more. How many people died because FDA didn’t allow?
The other part I have a problem with is people having a right to the vaccination. From where is this right derived? Any why doesn’t it apply to the dozens (hundreds, thousands?) of other treatments waiting on FDA approval?
Alan Goldhammer
Jan 16 2021 at 9:58am
Barkley’s comments were just too silly. When the NBA held their ‘shelter in place’ season last year there were close to zero COVID-19 cases. Now that they have moved back into society they are having problems just like everyone else. Unlike football, basketball teams have small rosters. These guys are also rich and shouldn’t need to go out to the grocery store and run errands like the rest of us. there should be minimal exposure to the virus since they can social distance with ease. The fact that players are getting infected means they are not taking the needed precautions or that the team staff they interact with are not either. This is a complete joke and to argue that the players deserve preferential treatment because they have high incomes strikes me as absurd.
If one is serious about the benefit principle, K-12 school teachers should be the first ones vaccinated so that schools can reopen with all due haste. Now that’s a big benefit I could support and I’m surprise that David is writing about entitled basketball players rather than those workers who are far more important.
robc
Jan 16 2021 at 11:28am
to argue that the players deserve preferential treatment because they have high incomes strikes me as absurd.
That is the argument he specifically didnt make. He argued they deserve it because they pay more in taxes.
David Henderson
Jan 16 2021 at 12:08pm
Good catch, robc.
Alan made the mistake that Kenny Smith made and that both Sir Charles and I called Kenny out on.
Alan Goldhammer
Jan 16 2021 at 6:02pm
David, here is the quote from Barkley you highlight
There is pretty much a direct relationship between income and taxes paid for 99% of Americans.
You did not address my major point, that there is better benefit for providing vaccine to school teachers. Not everyone is an NBA fan.
Jon Murphy
Jan 16 2021 at 6:50pm
Sir Barkley addresses that point, too
Juan Manuel Perez Porrua Perez
Jan 16 2021 at 2:00pm
Well, he didn’t make it directly: that would not just be callous but also impolite. But, with a progressive tax code that’s what it amounts to: the higher your income, the more taxes you pay, and you deserve preferential treatment. He made the argument indirectly.
robc
Jan 16 2021 at 2:57pm
He didnt just not make it directly, he corrected someone who made it directly.
While with the US tax code it is mostly (but not always!*) The same, but the principle is different.
*I paid $0 in federal income tax from 2016-2018 despite an above average income.
Jon Murphy
Jan 16 2021 at 12:48pm
Or that infection is a probability and it is impossible to get that probability down to zero. Thus why infections still pop up in places like China, New Zealand, Australia, etc.
It could be a lack of precautions. It’s more likely just the nature of the thing.
Greg G
Jan 16 2021 at 5:04pm
You can always count on Charles Barkley to start an interesting argument.
I don’t know what the optimal vaccine policy is but it’s not obvious that giving it to NBA players might not prevent more downstream infections than the other options being discussed.
And having the NBA to watch would make it easier for the rest of us to stay home and avoid riskier behaviors.
Make the Golden State Warriors Great Again!
Jon Murphy
Jan 16 2021 at 5:32pm
And the NHL. MLB and NFL (my two favorite sports) didn’t help a whole lot given both the Red Sox and Patriots were terrible!
Vivian Darkbloom
Jan 17 2021 at 3:24am
I agree with Barkley. And, his reasoning is not soley in his self-interest. I look at it this way as far as “benefits” are concerned: Simply stated, when very productive (and high-earning) citizens pay a lot of taxes, that benefits *all* citizens, not merely the person paying taxes. It is in everyone’s interest that they continue to pay those taxes and if they are sidelined by a virus, they’ll stop doing so.
I’ve often thought that there should be some sort of award to publicly recognize those citizens who may the most to support all of us collectively. It’s not that those who pay high taxes deserve preferential treatment, it is that the rest of us deserve that they get preferential treatment.
AMT
Jan 17 2021 at 3:41am
I think this is the strongest argument and is overwhelmingly important from a utilitarian perspective. Google tells me there are about 5000 pro athletes in the US, so how much does that delay others from getting the vaccine, a tiny fraction of a single day? Totally worth it.
https://ourworldindata.org/covid-vaccinations#how-many-covid-19-vaccination-doses-have-been-administered
Apparently 11.72 million vaccinated in the US in about 26 days, so about 450k per day. That means your vaccine will be delayed by 5k/450k=0.011 days, approximately fifteen minutes. Yeah, I’ll wait an extra fifteen minutes to get a far better entire season of sports.
But also, income and taxes paid obviously track extremely closely, and no one is impressed if you can say “hey look, there are a few rare exceptions.” Everyone knows this, so trying to fight about this point really makes your argument appear extremely weak. We know professional athletes have high incomes, duh.
Thomas Hutcheson
Jan 17 2021 at 6:45am
Vaccinating “essential workers” those whose absence because of sickness would disproportionately harm lots of people is already recognized as a criterion. Often this coincides with people in very public facing jobs and who are likely to become infected and spread infections. This is also recognized as a criterion. The question is how to balance these criteria and vaccinating those whose infection would be fatal/ most damaging in a system that is easy enough to administer as to prevent vaccinations lagging behind supply of vaccines. Adding an income/taxes paid criterion could only further complicate the system.
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