One would personally allow leaking 40 percent from the bucket for transferring money to poor people from rich. Rich people should transfer 40 percent of their income for poverty alleviation.
Government should impose higher taxes on higher income group of people. This would help to redistribute income level in the country.
People differ in terms of their opinion regarding income distribution from rich to poor because of their income level. Higher income group of people would prefer lower leakages where as poor people prefer higher leakages.
Relative poverty is elastic concept in which people are not able to maintain the average standard of living in the country. One would consider the relative poverty concept because absolute poverty has almost vanished.
In the United States, almost all people can afford to survive. Therefore, the concept of absolute poverty is used to defining poor in the country. If people are not able to maintain the average standard of living in the country, then they would be considered as poor.
The current poverty line can be calculated by considering the rise in price level over the years. If the prices have risen by about a factor of 7 and the poverty line in 1964 was set at $3,000, then the current poverty line would be $82,589.79.
The following is a formula for measuring the poverty line by considering the changes in price level.
Putting given values in the formula,
Thus, the current poverty line would be $82,509.79 considering that a price rises by a factor of 7 and the time of 49 years (the difference between 1964 and 2013). The actual poverty line in the Unites states is less than $82, 589.79.