More from Conor:
A height tax sounds horrible and absurd, but it would actually be pretty darn efficient: You would get the benefit of taxing something strongly correlated with a higher income, without the drawback of distorting incentives or decreasing effort. You can change how hard you work; you can’t really change your height.
I share Greg’s moral intuition that a height tax would be, somehow, wrong. But the more I see data like this, the more I think it might be a good (if utterly impractical) idea.
My sense is that the height tax strikes people as wrong in part because of what I jokingly named Karl’s Law.
Given equal size tax bases the economic inefficiency of a tax is inversely proportional to how much people hate it.
That is, people hate taxes that they cannot avoid. Yet, taxes which can’t be avoided are the most efficient. There is a sense that people are being punished for something that they cannot help. The larger question perhaps is whether or not this part of moral intuition is something that should guide tax policy or something that should be used to deflect criticisms of lump-sum taxes.
My fellow economists love to point out the flaws in common intuition through the use of careful reason. My sense, however, is that we should tread carefully. If something appeals widely to intuition then that is a signal that it is reflecting an important underlying preference. At the very least we should try to understand what that preference is, so that we can assuage the public’s fear.