We study optimal income taxation and public-goods provision under the assumption
that the cross-section distributions of productive abilities or public-goods
preferences are not known a priori. A conventional Mirrleesian treatment is shown
to provoke manipulations of the policy mechanism by individuals with similar interests.
The analysis therefore incorporates a requirement of coalition-proofness. The
main result is that increased public-goods provision is associated with a more distortionary
and a more redistributive tax system. With a conventional Mirrleesian
treatment, the level of public-goods provision is not related to how distortionary or
redistributive the tax system is.