(Revised July 2024)

We study a Mirrleesian economy with labor income, consumption, and retirement savings or bequests. We derive a novel representation of optimal non-linear income and savings distortions that highlights the role of consumption inequality and consumption responses to tax changes. Our representation establishes a close connection between the formula for top income taxes of Saez (2001) and the uniform commodity taxation theorem of Atkinson and Stiglitz (1976): One cannot be valid without the other, and departures from this joint benchmark lead to a clear trade-off between income and savings taxes. Consumption data in turn discipline the optimal departure from this benchmark. Because consumption is much more evenly distributed than income, it is optimal to shift a substantial fraction of the top earners’ tax burden from income to savings.