3. Effect of proportional income tax: Suppose the government imposes a proportional income tax on the representative consumer 's wage income. That is, the consumer 's wage income is w(1 T) (h l) where T is the tax rate. The consumer's budget constraint thus becomes C = (1 T)w(h l) + 7c T. 1 (a) Try to graph the consumer '3 budget constraint. What is the slope of the budget constraint? (b) Assume the income tax rate (T) increases, how does it affect the budget con- straint on the graph? Does the change resemble an increase or decrease in wage w? What is the economic interpretation of this change? (Hint: the effec- tive wage is (1 T)w.) (c) On the same graph, decompose the substitution and income effect due to the increase of the income tax rate