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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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  12. 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..
  13. Edward C. Prescott, 2003. "Why do Americans work so much more than Europeans?," Staff Report 321, Federal Reserve Bank of Minneapolis.
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  15. 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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  17. Rogerson, William P, 1985. "Repeated Moral Hazard," Econometrica, Econometric Society, vol. 53(1), pages 69-76, January.
  18. 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.
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Blog mentions

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  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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