Armstrong High School Plymouth, USA

Finalist from the USA


It is undeniable that the Covid-19 pandemic has changed our world. As students, we’ve seen the first-hand impacts on our education. In a big city like Minneapolis, Minnesota, in-person learning ceased for more than a year due to lockdowns. As a result of students being out of school, our community has seen an increase in mental health issues and student dropouts, as well as a decrease in academic rigor and more. The continuing impact lockdowns have had on our academic lives led us to choose a topic directly related to this experience: How can we set taxes, instead of lockdowns, in order to reduce deaths during a pandemic?

While lockdowns were somewhat effective in minimizing Covid-19 deaths in the United States, these restrictions led to severe social impacts. The disruption of daily career routines caused by lockdowns affected all, especially young students. Research from the United States Bureau of Education found that remote learning as a result of lockdowns negatively impacted academic growth in grades k-12. Also, enrollment in higher education declined following lockdowns, most notably among students of color and those from lower-income families.  Furthermore, isolation from lockdowns led to new or exacerbated pre-existing mental health issues for many students.

As a solution, we propose establishing a tax that could generate funds to be used for the purpose of keeping schools open. Specifically, a 30% tax would be charged for social events at which the pandemic-inducing virus is most transmissible. Patrons of events such as indoor clubs, bars, sports games, and restaurants would be required to pay this tax, which we call the Large scale Entertainment And Public dining tax or LEAP tax for short.

Not only would this tax help create a more equitable balance between saving lives and preserving livelihoods, but the revenue generated from it would also fund virus mitigation efforts that would be required in order for schools to stay open during a pandemic. Expenses such as COVID testing, air purification systems, and personal protective equipment would all be covered by LEAP tax revenue. Moreover, clubs, bars, sports arenas, and restaurants could continue to operate (although at a reduced capacity), leading to less unemployment and the need for government stimulus. Thus, we propose the U.S. uses the LEAP Tax to eliminate lockdowns in the midst of a pandemic.

Let’s LEAP into the future to save lives and preserve livelihood!

Their YES! topic

How can we set Taxes, instead of Lockdowns, in order to Reduce Deaths during Pandemics?

by Arijit Ghosh (RWI)

Governments have a large role to play during pandemics given that disease transmission leads to an externality problem. Simply put, viruses like SARS-CoV-2 can be spread easily from one person to another. The mechanism is exactly the same as in the case of climate change: an externality problem exists with carbon emissions since such emissions from one factory can endanger the lives of many, even though they may not have received any gains from the emission activity or chosen to undertake it themselves.

In the presence of negative externality problems, economists prescribe two standard tools: taxes (price instruments) or quotas (quantity restrictions). As a result, a carbon tax is a price instrument and a ceiling/cap placed on the quantity of CO2 emissions is a quota or quantity restriction. When it comes to pandemics, lockdowns are therefore quantity restrictions because Governments can use them to restrict the quantity of social interactions among people. However, an important policy tool in the fight against pandemics can be to induce monetary costs on social interactions with the help of taxes. An important benefit of such taxes is that Governments can collect the funds and then redistribute them among people. A recent paper from economists at the University of Chicago, Princeton, and the London School of Economics looks into the technical and theoretical aspects of such a tax.

The objective of this YES! Team would be to work on a design for a tax on social interaction during pandemics. As a first pass, the team would consider disease transmission data from COVID-19 and focus on a country level case study, for example Germany or the United States.

Our main task would be to arrive at a policy design that Governments can use to levy taxes on externality generating behavior such as social interactions during pandemics, for example going to the cinema or restaurants, meeting friends, attending sporting events at stadiums, etc. Some ideas for generating taxes in this context can be designing taxes through bluetooth tracking via apps such as the Corona-Warn in Germany or taxing those goods which enable recreation and social interaction, such as meals in restaurants, tickets to sporting events, or airline tickets. Another important task for the YES! Team would be to arrive at an estimate of how much tax revenue can be collected under different scenarios and different levels of social interactions. This would allow for quick analyses on how well the tax revenue can be redistributed.

The team would have to address public attitudes to taxes on social interactions. At face value, lockdowns can economically hurt the poor much more than the rich. The same goes for taxes. Taxes can be more easily paid off by the rich than by the poor. Moreover, people can also have questions on data security: therefore, this has to be very seriously taken under consideration too.

Arijit Ghosh

Photo: Arijit Ghosh

Arijit Ghosh works as a researcher and doctoral candidate at the RWI-Leibniz Institute for Economic Research. His primary research interest lies in applied microeconomics in spatial contexts. He is also interested in the broad areas of regional and urban economics as well as public economics.