Optimal Commodity Taxation Ramsey rule Similar reasoning is used for good y. Optimization therefore leads to △X△Y X Y Ramsey rule says that to minimize total excess burden. tax rates should be set so the percentage reduction in the quantity of each good demanded is the same 1010 Optimal Commodity Taxation: Ramsey Rule • Similar reasoning is used for good Y. • Optimization therefore leads to: X  X Y 1 Y1 = • Ramsey rule says that to minimize total excess burden, tax rates should be set so the percentage reduction in the quantity of each good demanded is the same