Balancing governmental deficits for common good of society

Status Quo: Governments in deficits in dealing with financial crisis or social problems The recent financial crisis drags government across the world a tough period, bringing huge deficits and lacking of public funding. The chancellor of UK, FOR EXAMPLE, said the recession and credit crunch had blown away both the growth and deficit forecasts he made in November's pre-budget report as he forecast the government would borrow a record £175bn in this fiscal year. A year ago he forecast growth for this year of around 2.5% - in line with the economy's long-term average. By November's pre-budget report that had fallen to around -1% but now even that has turned out to be hopelessly optimistic and blew away a decade of boasting from Gordon Brown that he had abolished "Tory boom-bust". The unemployment rate in America, however, hit 26-year high, rising to 9.6%, and it is expected to hit 10 percent within months. Earlier this year in France, President Nicolas Sarkozy was under pressure to raise taxes on the wealthy, as his pledge to make his country richer is under great pressure by the economic crisis. French labour unions planned a nationwide strike to call for a tax increase on high-income earners. In China, where is considered a country less influenced by financial crisis, rich people are paying enough tax and not willing to pay more leading the gap between rich and poor and between the most affluent eastern and less developed western areas are deepening everyday. 5.1 million college graduates are not able to find jobs this year while 134.9 million people still live in poverty. Social problems like increasing unemployment rate, anti-poverty programs etc. all needs huge governmental funding, which facing severe challenge under financial crisis. Solution to huge deficits and public funding: Significance of the increase of income tax of the rich is that the government would get increasing tax revenue which could be used to invest in public projects and services hence the well being of the whole society. According to the World Bank, under the current crisis, increased public funding and spending is a way out of the hole we're all in. Governments in deficit can not just start printing money in an ad hoc fashion, which will lead to dramatic increases in inflation and recession and everyone would suffer more, rich and poor alike. Progressive taxation should increase the total tax take. This means that increased funds are available for spending on worthwhile socially beneficial programs, such as education, health care, infrastructure etc. For example, in countries like Canada, the tax revenue is the major source of public investment. Though tax is high, but in turn the whole society dramatically benefit from it. More health care provided while mortality rate and fertility rate remains one of the lowest one in the world. It is clear to see that tax revenue is significant to improve social well being. Obama’s campaign pledge includes taxing on the rich people for more fairness and balance between the rich and other social groups. After 2010, American households making over $250,000 would see the rate at which they can deduct mortgage-interest payments and other items from their taxes reduced to 28% from the current 35%, which means they will pay more tax for $318 billion over 10 years. All those money will be used to start expanding health-care coverage to all Americans.