In Canada, a husband and wife are taxed separately on their incomes. In contrast, in the United States the fundamental unit of taxation is the family; regardless of whether the husband or the wife earns an extra dollar, it is taxed at the same rate. Imagine that family utility increases with family consumption, but decreases with each spouse’s hours of work. Each spouse’s hours of work depend on his or her wage. A tax on earnings distorts the work decision of each spouse, creating an excess burden. How should taxes be set so the family’s excess burden is as small as possible?