In the preceding chapter we argued that multiple tax bases, separate rate structures, and a variety of special provisions can be understood as a set of related policy instruments that are shaped and used by the government in the course of its continuing struggle to maintain itself in elected office. In this chapter we explore this idea further, using a model that is more formal than the one presented in Chapter3. The model is also more detailed with respect to individual behavior, allowing for the possibility that voters may reduce their tax liabilities by “self-selecting” their level of work effort in order to alter their tax liabilities. Allowing taxpayers to mimic the behavior of others who face lower tax rates is a way of acknowledging that some characteristics of taxpayers that would be a useful basis for taxation, such as potential work effort or intellectual ability, cannot be directly observed by tax collectors. This means that the government must levy taxes according to surrogate characteristics that are correlated with the basis upon which it would prefer to impose taxes, while allowing for the fact that taxpayers may choose to misrepresent themselves in response to taxation based on these surrogate characteristics.