it is estimated that this reform helped to reduce the gini coefficient and thus inequality in personal income distribution by percentage points without having any discernible disincentive effect martorano a progressive tax system affects all income groups and their relative incomes including the income gap between the middleclass and top income earners on the expenditure side social transfers and the free or subsidized provision of public services are often directed at specific groups such as the poorest families with many children the elderly and the unemployed from this perspective social expenditure is better suited to preventing or reducing poverty and to protecting social groups that are particularly disadvantaged or vulnerable however to what extent public expenditure aimed at reducing inequality should be targeted to specific social groups and how has been subject to debate undesa it has also been argued that targeting requires administrative capacities and involves transaction costs and that the selection of the groups to be targeted may often be influenced by political interests mkandawire