If we are interested in understanding how policy may affect life outcomes it is of central importance to go beyond the narrow incentive effects of taxes and welfare on labor supply and to consider changes in human capital accumulation and indeed marriage. There have been a number of papers that recognize this link between education, lifecycle labor supply, savings and the tax and welfare system.2 This literature has focused on understanding incentive effects and analyzing the impact of policies such as the Earned Income Tax Credits (EITC) or educational subsidies, but has not considered the optimal structure of taxes. The current paper (together with that of Stantc heva (2015)) is distinct in that it solves for the optimal structure of taxation and education subsidies, albeit in a restrictive fashion.