Consider an economy with two representative households (i=l,2) that supply labor, I'- , to the representative rm and buy a consumption good, Ci . The households differ in their (innate) earning capacity, wi . We let w2 = w > 0 and W1 = 0 . Both households share the same preferences given by: ui(ci,li)=ci 2/ 31'6\". The rm is using a production technology which exhibits constant returns to scale and perfect substitution between the two skill levels. The price of the single consumption good is normalized to unity. All markets are competitive. The government is considering the implementation of a linear labor income tax system to address redistributive concerns. Assume that the government is Rawlsian, namely seeking to maximize the well-being of the least well-off household subject to a balanced budget. Denote by b the marginal tax rate and by a, the lump-sum transfer