We consider a model where agents differ in their preferences about consumption labor and health,in their (health-dependent) earning ability, and in their health disposition. We study the jointtaxation of income and health expenditure, under incentive-compatibility constraints, on the basisof efficiency and fairness principles. The fairness principles we consider propose, on one side,to reduce inequalities deriving from factors that do not depend on individuals'' responsibility. Onthe other side, redistribution should be precluded at least when all agents in the economy haveequal physical characteristics. We construct, on the basis of such principles, a particular socialwelfare function. Then we give the explicit formula for the comparison of tax policies: we provethat a tax reform should always benefit agents with the worst earning ability and the worst healthdisposition first. Finally, at the bottom of the income distribution the optimal tax scheme shouldexhibit non-uniform tax rates over health expenditure and non-positive average marginal tax ratesover income.
