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The COVID-19 pandemic closed our public schools on March 13. On that very same day, I joined some other parents to home school our children—at least until their schools developed remote learning opportunities. The situation gave me the chance to teach (thanks to the internet) between three and nine students, ranging in ages from 8 to 15, how to think and write about one of my favorite topics: Taxes. I’ve been wanting to do this for three years, and now was my chance.
“You can’t just talk about taxes everyday, Mom.”
Fair enough. My daughter’s admonition made me recall what Tulane University’s Marjorie Kornhauser wrote for The Washington Post three years ago: “To be tax literate, citizens should understand that taxes are not just numbers and abstract principles, and they are not arbitrary.”
But taxes are a little hard to introduce to younger minds. So I got creative with my situational writing prompts, which you can see here. Two of the seven address specific tax issues—but in a way my captive students could grasp based on their own experiences. And in return, they gave me some notable insights into sin taxes and income tax rate structures.
Is a sin tax the best way to reduce a bad behavior?
If you want less of something, tax it, says Tax Policy 101. Did my students agree? Should people pay a fine (which can be thought of as a type of sin tax) if they don’t follow “stay at home” directions from government during this pandemic? Or should government reward them for staying home, perhaps with a cash payment? That is, what works better to induce desired behavior, a carrot or a stick?
A few sixth and seventh graders thought a reward was a better idea—and seemed to understand the regressive nature of a fine. After all, they thought, “people love money” and "would be willing to stay home if they had a motivation.” More important, “some people need that money to pay bills or buy food.” It would be bad, they thought, to afford less food because of a fine.
And “what about the people who are homeless?” asked one student. “Will they get charged because they are not in a shelter of some sort?”
A few other students—seventh and ninth graders—preferred a fine. One apparently fiscally concerned student asked “Where will the money come from to pay the reward?”
He didn’t see the value in paying people to do what they’re “supposed to” do. A reward could make them “more greedy.” And, he added, people don’t want to lose money—the viewed shared by most behavioral psychologists. He asserted that “a fine is better.” People would stay home and be safe, and the government would be able to collect the fines assessed and use that money for other things. “That’s a win-win,” he concluded.
Which is the better tax structure to raise money to reach a goal? Progressive or Flat?
All the students—even the third graders—understood that a government needs money to do its work, and that the money comes from tax revenue. But what did the students think of how a government levies taxes to meet its revenue goals? For adults, the answer depends in part on the value we placed on fairness, and how we define the concept.
But all of that sounds abstract and could overwhelm the students. So I gave them a more tangible example: A group of friends wants to collectively buy a $100 volleyball set. Each friend receives a different weekly allowance. They could contribute some of their allowance toward the purchase of the volleyball set in three different ways, each approach reaching different weekly revenue goals.
The students looked at pictures of stacked bar charts (scroll to page two)—to illustrate the options. The equipment could be financed with a ten percent flat tax on allowances, a progressive rate structure where the child with the smallest allowance pays 20 percent and the child with the biggest pays 50 percent; or a steeper progressive rate that ranges from 10 percent to 60 percent.
For this problem, the group of friends could take as much time as they wanted to collect the money, so could have different weekly revenue goals. The students had to explain why they preferred one option over another.
Interestingly, nobody chose the moderately progressive rate structure. One student thought it was unfair, because the friend with the smallest allowance would pay more toward the volleyball set than in the other two options.
Several sixth through ninth graders chose the most progressive design. One said the friends with bigger allowances “can deal with having less money for one week. Look at how much they still have.”
Most felt the flat tax was “unfair.” Why? One student bluntly called it “selfish.” Friends supporting that option "probably have the highest allowance” and are in turn contributing the smallest share.
But one third grader wanted each friend to pay the exact same dollar amount each week, even if meant waiting many weeks to make the purchase. “Then it’s fair because no one ever has to pay more [dollars] than another.”
The big takeaway: Fairness is in the eye of the beholder, with big implications for the design of tax policy.
It’s never too early to talk about taxes.
I can’t help but wonder how tax policies will evolve by the time these kids can vote, some as early as 2024. And after about a week of learning what the neighborhood kids think about these tax topics, I came to one conclusion: I wanted to ask them more.
It looks I might have a lot more time to do it, too. We’ll see how it goes.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.
Matt York/AP Photo