Poverty is undoubtedly the most pertinent problem across the world with wide income disparities. In America, for example, two thirds of the social wealth is in the hands of one-fifth of the populace. Inevitably, the remaining Americans are stuck in numerous financial problems. In 2009, 43.6 million Americans were living in poverty, which was a significant increase from the previous year (Gabe 2). Increasing taxes on the wealthy is a possible solution to dealing with these problems. However, President Barack Obama sparked the rage of some Americans by proposing to impose a 30% tax rate on people earning $1 million annually.
The political system duly realized that wealth inequality is a major drawback to the country’s economic progress. Consequently, proponents of tax increases argue that such an action will positively impact the American economy. For example, Nordic countries have reaped handsomely from these ventures, which have created wealth equality among the social groups in these states (Parker 26).
The realization of wealth inequality also led to the proposed law, known as The Buffet Rule, which aims to reduce America’s debt. The extra taxes garnered from the increased taxation of the wealthy would reduce the trillion dollar deficit and in turn boost the economy. Furthermore, an increase in taxes would curtail the investment and federal budget deficiencies. Currently, some of America’s infrastructure, such as the sewer systems, public transit, and water facilities are crumbling due to poor maintenance (Beck, Balfe and Burguiere 10). The education system also has insufficient resources especially in the department of public higher education. If the government fails to generate more money for its expenses, the federal budget deficit will snowball to $6.4 trillion in the next decade.
In light of the aforementioned predicaments, logic demands that the rich should increase their contribution to the economy. This way, the middle and lower class will be able to uplift their status and reduce their financial problems. The increase of taxes is therefore a necessary step to reduce poverty levels.