The paper explores how beliefs about the sources of income inequality influence redistributive policies in the US and Europe. It argues that different social beliefs about the role of luck versus effort in determining income can lead to multiple equilibria in tax and redistribution policies. In the US, individuals tend to believe that income is largely determined by effort, leading to lower taxes and less redistribution. In contrast, in Europe, there is a stronger belief that luck, birth, and connections play a significant role in wealth, resulting in higher taxes and more redistribution. The model shows that these differences in beliefs can lead to multiple stable equilibria, with one involving high taxes and redistribution and the other involving low taxes and less redistribution. The paper also highlights the role of fairness in shaping these policies, as individuals prefer outcomes that reduce the impact of luck on income inequality. The findings suggest that the US and Europe have different perceptions of fairness and the sources of income inequality, which influence their respective redistributive policies. The paper concludes that the interaction between social beliefs and welfare policies can lead to multiple equilibria, and that these equilibria can be ranked in terms of aggregate welfare. The study also emphasizes the importance of fairness in shaping economic outcomes and the role of social norms in promoting fair outcomes.The paper explores how beliefs about the sources of income inequality influence redistributive policies in the US and Europe. It argues that different social beliefs about the role of luck versus effort in determining income can lead to multiple equilibria in tax and redistribution policies. In the US, individuals tend to believe that income is largely determined by effort, leading to lower taxes and less redistribution. In contrast, in Europe, there is a stronger belief that luck, birth, and connections play a significant role in wealth, resulting in higher taxes and more redistribution. The model shows that these differences in beliefs can lead to multiple stable equilibria, with one involving high taxes and redistribution and the other involving low taxes and less redistribution. The paper also highlights the role of fairness in shaping these policies, as individuals prefer outcomes that reduce the impact of luck on income inequality. The findings suggest that the US and Europe have different perceptions of fairness and the sources of income inequality, which influence their respective redistributive policies. The paper concludes that the interaction between social beliefs and welfare policies can lead to multiple equilibria, and that these equilibria can be ranked in terms of aggregate welfare. The study also emphasizes the importance of fairness in shaping economic outcomes and the role of social norms in promoting fair outcomes.