Unanimous opinion, supported by our basic rights and by reflective philosophy, happens to hold that optimum income taxation and distribution are not to be determined by individual utilities and a social welfare function. There fore, the criterion is an equality in liberties: social freedom (our constitutional basic rule), and equal total freedom respecting it and Pareto efficiency. The resulting tax or subsidy, which is incentive-compatible, amounts, equivalently, to an equal sharing of the product of the same labour (with different productivities), to a basic income financed by equal labours, to a general reciprocity of transfers of the product of the same labour, or to a basic income and a flat tax exempting overtime work. The required information is available and the scheme can be introduced by classical reforms.
Liberty-based optimum distribution and taxation