The composition of the British parliament is determined in part by the proportional representation system of voting. Another feature of the electoral process in the US is that voting rates are fairly low. If the Tiebout model is correct, we might conclude that each representative's district is composed of voters with fairly homogeneous preferences. The only policy government makes is redistribution- the tax rate and how to redistribute tax revenue.
People have single peaked preferences and care only about their own income.
Using our discussion of the EITC as a basis, verbally and graphically demonstrate how you think that a progressive income tax might affect work effort. Draw some indifference curves that demonstrate the effect of the tax system on work effort. Why or why not. Suppose that the social security system does not exist, but the government does guarantee that the consumption of retirees will be at or above some minimum, C min . Demonstrate this effect graphically.