Weeks after the US presidential election came to a close, giving Obama a second term in office, it has come to his awareness that repairing America’s finances is imperative. Obama has before argued this financial problem must be solved by cutting spending and raising taxes. It has become increasingly important in recent times due to George W Bush’s tax cuts expiring in less than two months. The lack of spending and reduced income could lead to another recession. Also higher taxes discourage work and investment and encourage tax evasion. As it happens, Obama has already made strides in the right direction by decreasing tax breaks for the rich. However there is still uncertainty in the White House over the issue.
The highest marginal tax rates is 33% and a good way to gain extra revenue would be to restore the rates before George Bush’s tax cuts were put in place. Another way would reduce budget deficit would be to enhance the progressive tax system. With greater tax levied on the wealthier, more revenue can be gained. President Obama has intended to implement this policy, which has been accepted by most of the public. The projected target is to save $4 trillion over the next decade with $1.6 trillion through tax revenues.
Written by Stefan
Edited by Rukun Goel