The New York Times Magazine "Year In Ideas" issue is great again. One of the 70 ideas covered is Mankiw & Weinzierl’s proposal, floated in April, to tax the tall: Should we tax tall workers at a higher rate than their shorter peers? The answer – yes – "follows inexorably" from reigning academic theories of taxation, argues Greg Mankiw. … Using optimal-taxation formulas, Mankiw and Weinzierl crunch the numbers and come up with a "tall tax" amounting to 7 percent of a tall person’s income. Short people would receive a 13 percent rebate.
"we tax income based on an idea of justice [...] we do not need to incentivise being short"
At least one possible justification (and one typically used in optimal taxation theory) for progressive income tax and redistribution in general is utilitarian. Our intuition says that $1 means more to a poor than a rich person so transferring $1 from the rich to the poor is a gain for society. This, however, needs to be balanced against deadweight loss caused by incentive effects.
This combination is what makes height tax optimal with utilitarian ethics. Height is sort of being used as a proxy for income. Height correlates with income but doesn't respond to incentives so basing taxation partly on it allows for a net utility gain when balancing the utility gain of redistribution against the utility loss from incentive effects.
Tax men who are over 6ft and make more than $100,000. Call it the race neutral white male tax. Allocate the funds to feed the pygmies and educate middle schoolers about the concept of economic inelasticity.
Resentment among people who disagree about what constitutes justice, which is quite a lot of people. However I think just taxing the tall would be slightly less likely to foment civil war than taxing a racial group.
6’10, also hairy. Totally agree, the tax on Tall people already exists: clothing usually more expensive as it is more a rarity, throwing back out pretty much once a month, medical, uhhh don’t get me started on how many doorways, cars, seats, anything... WE DONT FIT. I know I’m 11 years late, but I was 10 when this post came out and I finally have a voice.
If you were a Gene, would you allow the robot you made to interact with the rest of the universe construct local law fields penalizing genes directly, or the results of their activity? Perhaps if you could target competing genes but 'government' seems to be a blunt tool for this purpose, capable of backfiring. Genes that allow for use this tool for gene conflict purposes are effectively 'going nuclear', and anyway, if successful, will require another gene to effectively 'feed' the government's new found hunger for active genes. Teaching the government to eat genes is only a good idea if its ability can be limited before it eats you. If, however, the robot were capable of mainaining a model that always kept your allies and you safe, it might be reasonable, do we have this model or ability though, and how would we convince our genes that we had it?
Given that we *should* feel predisposed to not like this idea, based on how dangerous it is to some genes, shouldn't we therefor give it a greater chance?
Why do taxes exist anyway? Why is it right to redistribute wealth? Why shouldn't I just pay for the public goods I consume rather than pay for those others consume? I'm speaking as a high income, fit and healthy, privately educated 28 yr old who feels he's not getting much value for his tax payments already, and I'm 6'8" (and hairy) to boot! A tax on the tall? Let all the tall people unite against whomever tries to force that on us and see what happens... The meek shall not inherit the Earth!
In particular: we tax income based on an idea of justice, we take marriage, children etc. into account more to incentivise the family than to adjust fairness - we do not need to incentivise being short.
In general: this seems to indicate that economics is less a science than its supporters admit - these decisions are highly political not theoretical.
notsneaky, I generally appreciate your arguments, but here I think you're off-base.
"why would only 'income' be a status good, but not 'leisure'... there's no reason to think that one particular effect must dominate the other - as it is usually assumed"
Well, it's not usually 'assumed'. It's widely recognised that for the argument from status effects to even get off the ground, such effects have to operate more strongly in respect of some goods than others - which is why people have been trying to test these ideas empirically rather than just making assumptions. There is actually evidence that people don't seem to treat, say, the number of weeks holiday they get as a status good in the same way that they do income. (And FWIW, the evidence for the latter doesn't seem to me to be confined to idiosyncratic goods and groups at all. It tends to turn up on income for nationally representative samples in a variety of countries. Those that don't fit this pattern seem to be the exception rather than the rule. There are reasons to be careful here, but that's really not one of them.)
There are perhaps some definitional issues here about what counts as leisure and what counts as consumption, but your example of people bragging about where they went on holiday doesn't seem to support your point terribly well, given that bragging rights are likely to be pretty strongly linked to how expensive a place is to visit and consequently to income. I agree that this whole issue becomes more complicated if there are multiple positional goods. But if many, or most of those goods are linked to income, then that tends to reduce the complexity rather a lot. Whether they are is something of an open question, but as far as I can tell, it's not quite as open as you seem to think, and contrary to your assertions, those you're criticising are hardly unaware of this issue.
I'm going to refrain from speculating as to your motives for not liking the argument. I'd suggest you extend the same charity to those who disagree with you. There seems to me to be very little reason to suspect they're more biased than you are.
To add to steven's comment about envy above (with which I broadly agree); If there is more than one positional/status good then it gets a lot more complicated. For example, why would only 'income' be a status good, but not 'leisure'? People certainly brag about where they spend their vacations, how much free time they have, etc. In that instance it may be the case that people end up working 'too little' (although, again, it's mostly the problem of those who care about status in the first place). At the very least, there's no reason to think that one particular effect must dominate the other - as it is usually assumed when this status/Pigovian justification is invoked. The evidence for status effects, aside from some idiosyncratic goods and groups, is, in my opinion fairly weak. All of which suggests that people like the justification not because there's meat to it, but rather simply because it justifies higher taxes.
a) the 'tax the tall' proposal could best be considered as a didactic trollb) if 'standard economic theory' doesn't take into account the irrational emotional impact of economic policy it's not worth tiddly squat.c) the disincentive effect of progressive income tax may be real, but it's not rational, and would not be, unless the marginal tax rate exceeded 100%. The point at which the marginal utility of additional effort becomes zero is overwhelmingly subjective. Pure emotion at work, as anyone who's had a lunchtime discussion with their higher income colleagues will readily agree.d) the 'tax the tall' troll is didactic because it introduces several beautiful biases in a condensed spaceBias no 1 : The assumption that 'not to disincentive effort' is an absolute good. Not proven. Go home and spend time with your children.Bias no 2 : The assumption that 'taxing the tall' would not have any undesirable side-effects. Not proven. As a tall person, it would put me in a highly unproductive murderous rage (no more or less rational than the disincentive effect of progressive income tax).Bias no. 3 : Positing that taxing the tall is reasonable because tallness has a moderate correlation with income, then sliding to the argument that it is preferable, because it is not a tax on income. Pure irrationality, and once the thought process became widely known, would reinforce the effect listed under bias no 2..Bias no 4 : Having created an impression of absurdity in most readers, the argument goes on, by juxtaposition, to its real intention, which is to contaminate its objective (progressive income tax) with the same or higher impression of absurdity. There is no demonstration, just juxtaposition, with the hope that the impression that postulate B is at least as absurd as postulate A will transmit like an electric spark.Bias No. 5 : Postulate B is the idea of a 'tax on entrepreneurial ability'. The bias is introduced by neglecting to distinguish between the tax on the entrepreneur as an individual and the tax on the wealth creating entity, the enterprise. Entrepreneurs have sometimes had a bad name for trying to take advantage of the fevourable taxation of the enterprise to reduce the taxation on themselves as individuals. As individuals, entrpreneurs are taxed according to the same principles as everyone else.Bias no 6 : is created by the vague and emotionally charged word 'Entrepreneur' itself. What constitutes an entrepreneur ? Anyone who takes a stab at anything, in the sense of trying something he/she is not sure of succeeding, is an entrepreneur. If I postulate (as an ugly 70 year old) for a job at McDonalds, in my way I'm an entrepreneur. Wealth is created as much or more by the salaried employee as by the absentee Chairman of the Board. So is taxing my senior citizen job at McD a tax on entrepreneurial ability ? The intentional emotionally charged reframing is similar to that involved in describing inheritance tax (a tax on the unearned income of the inheritors) as a 'death tax'. I read that example in Judy Harris's book on personality.e) The didactic effort takes us back to the underlying discussion, which as Robin points out, is as old as debates on taxes : 'so waddya think about progressive income tax ?'f) Economics 101 : putting the words 'fairness' and 'tax' in the same sentence is like putting matter and anti-matter in the same box.g) We get straight back to Darwin, with the tension between the legitimate interests of the individual and the legitimate interests of the group, both contributing to the survival of the Intelligent Tax gene. Robin, please reformulate tax policy in Darwinian terms.
"we tax income based on an idea of justice [...] we do not need to incentivise being short"
At least one possible justification (and one typically used in optimal taxation theory) for progressive income tax and redistribution in general is utilitarian. Our intuition says that $1 means more to a poor than a rich person so transferring $1 from the rich to the poor is a gain for society. This, however, needs to be balanced against deadweight loss caused by incentive effects.
This combination is what makes height tax optimal with utilitarian ethics. Height is sort of being used as a proxy for income. Height correlates with income but doesn't respond to incentives so basing taxation partly on it allows for a net utility gain when balancing the utility gain of redistribution against the utility loss from incentive effects.
Tax men who are over 6ft and make more than $100,000. Call it the race neutral white male tax. Allocate the funds to feed the pygmies and educate middle schoolers about the concept of economic inelasticity.
Richard Dawkins would be rolling in his grave right now.
Resentment among people who disagree about what constitutes justice, which is quite a lot of people. However I think just taxing the tall would be slightly less likely to foment civil war than taxing a racial group.
thanks for opposing affirmative aciton bigot
+1
so you're saying reparations might reduce the white birthrate. interesting.
height is inelastic, income is not. lol
99% tax would still work lol
6’10, also hairy. Totally agree, the tax on Tall people already exists: clothing usually more expensive as it is more a rarity, throwing back out pretty much once a month, medical, uhhh don’t get me started on how many doorways, cars, seats, anything... WE DONT FIT. I know I’m 11 years late, but I was 10 when this post came out and I finally have a voice.
If you were a Gene, would you allow the robot you made to interact with the rest of the universe construct local law fields penalizing genes directly, or the results of their activity? Perhaps if you could target competing genes but 'government' seems to be a blunt tool for this purpose, capable of backfiring. Genes that allow for use this tool for gene conflict purposes are effectively 'going nuclear', and anyway, if successful, will require another gene to effectively 'feed' the government's new found hunger for active genes. Teaching the government to eat genes is only a good idea if its ability can be limited before it eats you. If, however, the robot were capable of mainaining a model that always kept your allies and you safe, it might be reasonable, do we have this model or ability though, and how would we convince our genes that we had it?
Given that we *should* feel predisposed to not like this idea, based on how dangerous it is to some genes, shouldn't we therefor give it a greater chance?
Why do taxes exist anyway? Why is it right to redistribute wealth? Why shouldn't I just pay for the public goods I consume rather than pay for those others consume? I'm speaking as a high income, fit and healthy, privately educated 28 yr old who feels he's not getting much value for his tax payments already, and I'm 6'8" (and hairy) to boot! A tax on the tall? Let all the tall people unite against whomever tries to force that on us and see what happens... The meek shall not inherit the Earth!
In particular: we tax income based on an idea of justice, we take marriage, children etc. into account more to incentivise the family than to adjust fairness - we do not need to incentivise being short.
In general: this seems to indicate that economics is less a science than its supporters admit - these decisions are highly political not theoretical.
notsneaky, I generally appreciate your arguments, but here I think you're off-base.
"why would only 'income' be a status good, but not 'leisure'... there's no reason to think that one particular effect must dominate the other - as it is usually assumed"
Well, it's not usually 'assumed'. It's widely recognised that for the argument from status effects to even get off the ground, such effects have to operate more strongly in respect of some goods than others - which is why people have been trying to test these ideas empirically rather than just making assumptions. There is actually evidence that people don't seem to treat, say, the number of weeks holiday they get as a status good in the same way that they do income. (And FWIW, the evidence for the latter doesn't seem to me to be confined to idiosyncratic goods and groups at all. It tends to turn up on income for nationally representative samples in a variety of countries. Those that don't fit this pattern seem to be the exception rather than the rule. There are reasons to be careful here, but that's really not one of them.)
There are perhaps some definitional issues here about what counts as leisure and what counts as consumption, but your example of people bragging about where they went on holiday doesn't seem to support your point terribly well, given that bragging rights are likely to be pretty strongly linked to how expensive a place is to visit and consequently to income. I agree that this whole issue becomes more complicated if there are multiple positional goods. But if many, or most of those goods are linked to income, then that tends to reduce the complexity rather a lot. Whether they are is something of an open question, but as far as I can tell, it's not quite as open as you seem to think, and contrary to your assertions, those you're criticising are hardly unaware of this issue.
I'm going to refrain from speculating as to your motives for not liking the argument. I'd suggest you extend the same charity to those who disagree with you. There seems to me to be very little reason to suspect they're more biased than you are.
To add to steven's comment about envy above (with which I broadly agree); If there is more than one positional/status good then it gets a lot more complicated. For example, why would only 'income' be a status good, but not 'leisure'? People certainly brag about where they spend their vacations, how much free time they have, etc. In that instance it may be the case that people end up working 'too little' (although, again, it's mostly the problem of those who care about status in the first place). At the very least, there's no reason to think that one particular effect must dominate the other - as it is usually assumed when this status/Pigovian justification is invoked. The evidence for status effects, aside from some idiosyncratic goods and groups, is, in my opinion fairly weak. All of which suggests that people like the justification not because there's meat to it, but rather simply because it justifies higher taxes.
a) the 'tax the tall' proposal could best be considered as a didactic trollb) if 'standard economic theory' doesn't take into account the irrational emotional impact of economic policy it's not worth tiddly squat.c) the disincentive effect of progressive income tax may be real, but it's not rational, and would not be, unless the marginal tax rate exceeded 100%. The point at which the marginal utility of additional effort becomes zero is overwhelmingly subjective. Pure emotion at work, as anyone who's had a lunchtime discussion with their higher income colleagues will readily agree.d) the 'tax the tall' troll is didactic because it introduces several beautiful biases in a condensed spaceBias no 1 : The assumption that 'not to disincentive effort' is an absolute good. Not proven. Go home and spend time with your children.Bias no 2 : The assumption that 'taxing the tall' would not have any undesirable side-effects. Not proven. As a tall person, it would put me in a highly unproductive murderous rage (no more or less rational than the disincentive effect of progressive income tax).Bias no. 3 : Positing that taxing the tall is reasonable because tallness has a moderate correlation with income, then sliding to the argument that it is preferable, because it is not a tax on income. Pure irrationality, and once the thought process became widely known, would reinforce the effect listed under bias no 2..Bias no 4 : Having created an impression of absurdity in most readers, the argument goes on, by juxtaposition, to its real intention, which is to contaminate its objective (progressive income tax) with the same or higher impression of absurdity. There is no demonstration, just juxtaposition, with the hope that the impression that postulate B is at least as absurd as postulate A will transmit like an electric spark.Bias No. 5 : Postulate B is the idea of a 'tax on entrepreneurial ability'. The bias is introduced by neglecting to distinguish between the tax on the entrepreneur as an individual and the tax on the wealth creating entity, the enterprise. Entrepreneurs have sometimes had a bad name for trying to take advantage of the fevourable taxation of the enterprise to reduce the taxation on themselves as individuals. As individuals, entrpreneurs are taxed according to the same principles as everyone else.Bias no 6 : is created by the vague and emotionally charged word 'Entrepreneur' itself. What constitutes an entrepreneur ? Anyone who takes a stab at anything, in the sense of trying something he/she is not sure of succeeding, is an entrepreneur. If I postulate (as an ugly 70 year old) for a job at McDonalds, in my way I'm an entrepreneur. Wealth is created as much or more by the salaried employee as by the absentee Chairman of the Board. So is taxing my senior citizen job at McD a tax on entrepreneurial ability ? The intentional emotionally charged reframing is similar to that involved in describing inheritance tax (a tax on the unearned income of the inheritors) as a 'death tax'. I read that example in Judy Harris's book on personality.e) The didactic effort takes us back to the underlying discussion, which as Robin points out, is as old as debates on taxes : 'so waddya think about progressive income tax ?'f) Economics 101 : putting the words 'fairness' and 'tax' in the same sentence is like putting matter and anti-matter in the same box.g) We get straight back to Darwin, with the tension between the legitimate interests of the individual and the legitimate interests of the group, both contributing to the survival of the Intelligent Tax gene. Robin, please reformulate tax policy in Darwinian terms.