[citation needed] In the case of progressive taxes, the distortionary effects of a tax may be accompanied by other benefits: the redistribution of dollars from wealthier people to poorer people who could possibly obtain more benefit from them - in effect reducing economic inequalities and improving GDP growth.
[citation needed] For example, in Western nations the incomes of the relatively affluent are taxed partly to provide the money used to assist the relatively poor.
[citation needed] At the same time the poor have an incentive to conceal their own taxable income (and usually their assets) so as to increase the likelihood of their receiving state assistance (welfare trap).
[citation needed] Pigovian taxes create distortions intended to correct for externalities and produce a negative MCF.
"Sin taxes" are levied on products that incur additional costs to society, such as alcohol, tobacco and pollution.