Attack of the Public Finance Utility Monsters

31 July 2009 at 10:19 am 4 comments

| Dick Langlois |

I just saw this amusing abstract from Greg Mankiw. I think it will be far too subtle for most people.

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

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.

Extra credit: how would such a tax affect NBA salaries — like that of UConn’s seven-foot-three Hasheem Thabeet, who was taken number two in the recent draft?

Entry filed under: - Langlois -, Classical Liberalism, Law and Economics, Public Policy / Political Economy.

Special Issue of HRM on “HRM and Knowledge Processes” The Integration of Micro and Macroeconomics from a Historical Perspective

4 Comments Add your own

  • 1. Peter Klein  |  31 July 2009 at 10:28 am

    Reminds me of Coase’s argument that if government should regulate the market for goods and services, then it should also regulate the market for ideas, which many readers took as an argument for government regulation of the market for ideas.

    See also this and this on the Mankiw paper. Fun stuff.

  • 2. russcoff  |  31 July 2009 at 12:03 pm

    Short people…

  • 3. russcoff  |  31 July 2009 at 12:07 pm

  • 4. David Gerard  |  31 July 2009 at 12:57 pm

    It would affect his salary by him and many others playing for the once-and-future NBA dynasty — the Toronto Raptors

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