The tax we have to have
Looks might not kill, but they are certainly a magnet for money. Australian academics Andrew Leigh and Jeff Borland released research earlier this week confirming what we all secretly suspected: better looking Australians get hired first, earn more, and marry richer spouses.
Holding age, education, and origin fixed, the hourly wages of attractive people are around 20 per cent higher than their appearance-challenged contemporaries, reflecting similar conclusions in umpteen overseas studies.
The effect is especially pronounced for men: those with above average looks enjoy household incomes 15 per cent above the average, while more ‘minging’ chaps, as young Brits would say, earn 24 per cent below, a whopping gulf of around $30,000 a year, based on average Australian incomes, wholly owing to nature’s arbitrary favour.
The authors also found “the strongest evidence is for females where there is a premium in spousal income from being rated as ‘above-average’”. And plain women were 13 percentage points less likely to be married too.
Looks ratings were assigned by door-knocking interviewers conducting the survey. As the authors suggest, beauty is in the eye of the beholder only at the margin. That is, if your mate believes a girl (or guy) is an ‘8’, it is statistically very unlikely you will consider her (or him) a ‘4’.
If there were one piece of distressing evidence crying out for an evidence-based policy, then this is it. Social justice demands action to level the playing field. It doesn’t matter whether the beautiful earn more because their appearance makes them more effective, or simply because employers are aesthetically inclined.
Luckily, economic theory shows how promoting fairness can boost economic growth as well. Levying a fixed, lump sum, annual tax on the beautiful, quite aside from any moral arguments in its favour, would improve the efficiency of the tax system, and ultimately leading to windfall economic gains for everyone.
Unlike normal income tax, which retards the incentive to work, a lump sum Beauty Tax would have no effect on the decision to work because the beautiful would have to pay it regardless.
The government’s own Henry taxation review lends tacit support to a beauty tax by way of reference to land tax, which is efficient because “land cannot move to escape the tax”. The same principle applies to looks. Good looking people cannot easily undermine their attractiveness, and they certainly wouldn’t want to given the massive advantages good looks bestow.
Of course, the same principle could argue for taxes on intelligent people – who can earn income with far less time and effort than their dimmer peers – but intelligence, unlike land or beauty, is easy to hide.
A $1,000 annual Beauty Tax on the best looking people of working age – which would only partly offset the financial windfall the beautiful enjoy – could easily generate over $1 billion a year. The additional revenue could be used to cut marginal income tax rates for everyone, sharpening the incentive to work for handsome and ugly alike.
Alternatively, the extra revenue could be used to subsidise beauty spas, cosmetics or even botox treatments in order to help nullify nature’s egregious and blatant discrimination, or simply help bolster the government’s bottom line. As good looking people have done nothing to deserve their physical endowment, why shouldn’t they do their bit to shore up public finances?
And a Beauty Tax would certainly be no more difficult to administer than horrendously complex capital gains tax.
Taxpayers would simply submit standardised photographs taken by the incorruptible staff at two separate Australia Post outlets every year. The Tax Office would use sophisticated image-scanning technology, incorporating the latest scientific evidence on traits that make faces attractive, to calculate a Pulchritudinous Index for every person.
The Index would be appropriately adjusted by certified Body Mass Index scores to ensure obese people with pretty faces, for instance, were not unduly penalised. The resulting number would determine the extent of the Tax.
To ensure compliance, failure to submit an approved photograph would, as it does for people who refuse to take up private health insurance, attract a surcharge far in excess of the maximum Tax. At age 50, say, by which time gravity has typically eroded any looks premium, the Tax would no longer apply.
Economists should rally around this modest proposal because it accords with a key principle of tax theory: tax factors or traits than cannot easily be adjusted or hidden. Politicians should be quick to get on board too. After all politics is, as they say, show business for ugly people.
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