This paper summarizes James Mirrlees’ key contribution to the theory of tax policy. It argues that the Mirrlees
approach of viewing government as being constrained by imperfect information has changed profoundly how
we look at the normative public policy. In this view, asymmetric information provides the limit to redistribution
by restricting the efficiency-equity trade-off. It leads to consideration of other policy instruments for relaxing
incentive constraints and improving the efficiency of redistributive policies. Some of these instruments include
quantity controls, in-kind transfers and public provision or mandating of insurance, things we observe in practice.