Greg Mankiw is trying to make a reductio ad absurdum critique of the objective of income redistribution.  He has written a paper with Matthew Weinzierl which shows that optimal taxation will typically involve taxing all kinds of characteristics that seem patently unfair and unacceptable.  He concludes from this that it is the goal of income redistribution that entails these absurdities.

But there is a prominent guy who lives at a nice home at 1600 Pennsylvania Avenue who wants to “spread the wealth around.” The moral and political philosophy used to justify such income redistribution is most often a form of Utilitarianism. For example, the work on optimal tax theory by Emmanuel Saez, the most recent winner of the John Bates Clark award, is essentially Utilitarian in its approach.

The point of our paper is this: If you are going to take that philosophy seriously, you have to take all of the implications seriously. And one of those implications is the optimality of taxing height and other exogenous personal characteristics correlated with income-producing abilities.

This argument fails because the objectionable policies implied by optimal taxation in his model have nothing to do with income redistribution or utilitarianism.  Indeed they would be optimal under the weaker and unassailable welfare standard of Pareto efficiency which I would assume Mankiw embraces.

Let me summarize.  Optimal taxation involves minimizing the distortionary effect on output from raising some required level of revenue.  It does not matter what that revenue is being used for.  It could be for redistribution but it could also be for producing public goods that will benefit everyone.  Whatever revenue is required, the optimal taxation policy generates this revenue with minimal cost in terms of reduced incentives for private production.    Taxing exogenous and observable characteristics that are correlated with productivity is a way of generating revenue without distorting incentives.

If we tax income (a direct measure of productivity) you can lower your taxes by earning less, that is a distortion.  If we tax your height (known to be correlated with productivity), you cannot avoid these taxes by making yourself shorter.

So the implication that Mankiw wants us to be uncomfortable with is an implication of the way optimal tax theorists conceive the problem of revenue generation and the implication would be present regardless of how we imagine that tax revenue being spent. It has nothing to do with redistribution and we can feel uncomfortable with height taxation without that making us think twice about our desire to redistribute wealth.