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The Optimal Taxation of Height: A Case Study of Utilitarian Income Redistribution

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  • N. Gregory Mankiw

    ()

    (Harvard University, Economic Department)

  • Matthew C. Weinzierl

    ()

    (Harvard Business School, Business, Government and the International Economy Unit)

Abstract

Should the income tax include a credit for short taxpayers and a surcharge for tall ones? The standard Utilitarian framework for tax analysis answers this question in the affirmative. Moreover, a plausible parameterization using data on height and wages implies a substantial height tax: a tall person earning $50,000 should pay $4,500 more in tax than a short person. One interpretation is that personal attributes correlated with wages should be considered more widely for determining taxes. Alternatively, if policies such as a height tax are rejected, then the standard Utilitarian framework must fail to capture intuitive notions of distributive justice.

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Paper provided by Harvard Business School in its series Harvard Business School Working Papers with number 09-139.

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Length: 27 pages
Date of creation: Jun 2009
Date of revision:
Handle: RePEc:hbs:wpaper:09-139
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Find related papers by JEL classification:
  • H2 - Public Economics - - Taxation, Subsidies, and Revenue
  • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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  1. Anne Case & Christina Paxson, 2006. "Stature and status: Height, ability, and labor market outcomes," Working Papers 27, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Health and Wellbeing..
  2. Narayana R. Kocherlakota, 2003. "Zero Expected Wealth Taxes: A Mirrlees Approach to Dynamic Optimal Taxation," Levine's Bibliography 666156000000000426, UCLA Department of Economics.
  3. Viard, Alan D, 2001. " Optimal Categorical Transfer Payments: The Welfare Economics of Limited Lump-Sum Redistribution," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 3(4), pages 483-500.
  4. Nicola Persico & Andrew Postlewaite & Dan Silverman, 2004. "The Effect of Adolescent Experience on Labor Market Outcomes: The Case of Height," NBER Working Papers 10522, National Bureau of Economic Research, Inc.
  5. Alesina, Alberto & Ichino, Andrea & Karabarbounis, Loukas, 2007. "Gender Based Taxation and the Division of Family Chores," IZA Discussion Papers 3233, Institute for the Study of Labor (IZA).
  6. Kanbur, Ravi & Keen, Michael & Toumala, Matti, 1991. "Optimal non-linear income taxation for the alleviation of income poverty," Policy Research Working Paper Series 616, The World Bank.
  7. Albanesi, Stefania & Sleet, Christopher, 2003. "Dynamic Optimal Taxation with Private Information," CEPR Discussion Papers 4006, C.E.P.R. Discussion Papers.
  8. Saez, Emmanuel, 2001. "Using Elasticities to Derive Optimal Income Tax Rates," Review of Economic Studies, Wiley Blackwell, vol. 68(1), pages 205-29, January.
  9. Alan D. Viard, 2001. "Some Results on the Comparative Statics of Optimal Categorical Transfer Payments," Public Finance Review, , vol. 29(2), pages 148-180, March.
  10. Tuomala, Matti, 1990. "Optimal Income Tax and Redistribution," OUP Catalogue, Oxford University Press, number 9780198286059, March.
  11. Kevin A. Hassett & R. Glenn Hubbard & Alan J. Auerbach & Robert J. Barro & N. Gregory Mankiw & Alan S. Blinder & Jon M. Bakija & Louis Kaplow & Edmund S. Phelps & John E. Roemer & Roger H. Gordon & Ma, 2001. "Inequality and Tax Policy," Books, American Enterprise Institute, number 53290, August.
  12. Mirrlees, James A, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Wiley Blackwell, vol. 38(114), pages 175-208, April.
  13. Immonen, Ritva, et al, 1998. "Tagging and Taxing: The Optimal Use of Categorical and Income Information in Designing Tax/Transfer Schemes," Economica, London School of Economics and Political Science, vol. 65(258), pages 179-92, May.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Does being short make you more likely to be a criminal?
    by Adam Ozimek in Modeled Behavior on 2010-05-03 11:39:11
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