In this paper we examine two crucial questions regarding the design of the optimal tax system, exploiting the 2009 Polish tax reforms. Firstly, we estimate the degree of substitution between the employment and self-employment tax bases on the extensive margin. In particular, we quantify the impact of changes in the differential in rates of taxation between the two tax bases on the propensity of taxpayers to declare any positive level of employment or self-employment income. Secondly, we contribute to the literature on elasticities of taxable income by providing estimates which are robust to changes in year-to-year income dynamics. We do this by exploiting variation in marginal tax rates around the 2009 reforms which occurs independently of an individual's position in the income distribution as a result of joint reporting with a spouse. The baseline estimates of the intensive-margin elasticities are 0.23 for the employed and 0.66 for the self-employed. The estimates jointly make possible a decomposition of responses to the tax reform of declared income into the intensive and extensive-margins, with the contribution of the extensive margin found to be around 7 percent of the total.