who wrote about it in his 1920 book "The Economics of Welfare". Pigovian taxes might target the undesirable production of greenhouse gases which cause climate change (namely a carbon tax), polluting fuels (such as petrol), water or air pollution (namely an ecotax), goods which incur public healthcare costs (such as alcohol or tobacco), and excess demand of certain public goods (such as traffic congestion pricing). The idea is to aim taxes at people that cause an above-average amount of societal harm so the free market incorporates all costs as opposed to only personal costs, with the benefit of lowering the overall tax burden for people who cause less societal harm. Reduced inequality Progressive taxation generally reduces economic inequality, even when the tax revenue is not redistributed from higher-income individuals to lower-income individuals. However, in a highly specific condition, progressive taxation increases economic inequality when lower-income individuals consume goods and services produced by higher-income individuals, who in turn consume only from other higher-income individuals (trickle-up effect). Reduced economic welfare Most taxes (see below) have side effects that reduce economic welfare, either by mandating unproductive labor (compliance costs) or by creating distortions to economic incentives (deadweight loss and perverse incentives). Cost of compliance Although governments must spend money on tax collection activities, some of the costs, particularly for keeping records and filling out forms, are borne by businesses and by private individuals. These are collectively called costs of compliance. More complex tax systems tend to have higher compliance costs. This fact can be used as the basis for practical or moral arguments in favor of tax simplification (such as the FairTax or OneTax, and some flat tax proposals). Deadweight costs In the absence of negative externalities, the introduction of taxes into a market reduces economic efficiency by causing deadweight loss. In a competitive market, the price of a particular economic good adjusts to ensure that all trades which benefit both the buyer and the seller of a good occur. The introduction of a tax causes the price received by the seller to be less than the cost to the buyer by the amount of the tax. This causes fewer transactions to occur, which reduces economic welfare; the individuals or businesses involved are less well off than before the tax. The tax burden and the amount of deadweight cost is dependent on the elasticity of supply and demand for the good taxed. Most