Optimal tax and transfer programs for couples with extensive labor supply responses

► The paper analyzes the optimal design of tax-transfer schedules for couples. ► Both unitary and collective approaches to family decision making are considered. ► Simple and intuitive optimal tax rules are derived as a function of sufficient statistics. ► Optimal tax rules depend on the same sufficient statistics under the unitary and collective approaches. ► Simulations suggest strong welfare gains from reduced tax rates on secondary earners.