In 1897 Irish philosopher and economist Francis Edgeworth set the utilitarian (happiness) foundations for highly progressive taxation. He pointed out that a utilitarian social planner will equalise the marginal utility of the population, but this requires equalising people’s disposable income (after tax). Edgeworth stated that those with greater than average productivity are fully taxed on the excess, and those endowed with lower average productivity are subsidised to bring them up to the average.
As specified in one study, the typical 6-foot American earned $5,525 more than a 5-foot-5-inch worker, after correcting for sex, age and weight. Research has identified that taller adults maintain jobs of higher standing and, on average, earn more than other workers. In developed countries, researchers have highlighted characteristics such as self-esteem, social superiority, and prejudice. Other studies have stated that on average, taller people earn more because they are more intelligent – an additional inch of height is associated with a one to two percentage
increase in earnings. If this is true height should be a useful indicator for determining an individual’s optimal tax liability. Therefore, a tall person of a given income should pay more in tax that a short person of the same income.
Using optimal-taxation formulas, Mankiw and Weinzierl (2007)* crunched the numbers and came up with a “tall tax” amounting to 7 percent of a tall person’s income. Short people would receive a 13 percent rebate. According to conventional utilitarian calculus, the optimal height levy is large. The optimal tax for white males in the US is divided into 3 height groups:
Medium = 1.77m – 1.84m
Tall = 1.85m
Taxing people by height is a rather unusual idea but it has been interesting to look into the research concerning optimal levels of taxation.
*The Optimal Taxation of Height: A Case Study of Utilitarian Income Redistribution Gregory Mankiw & Matthew Weinzierl (2007)