‘A dynastic system’: Bill Gates admits ‘many wealthy people take advantage of’ estate-tax loopholes

  • 12/31/2019 10:37 am ET Dara Brewton

Gates Strongly hinted he prefers Elizabeth Warren with her wealth tax over Donald Trump

In his New Year’s Eve post on his blog, Bill Gates discusses the current tax system in the United States saying that rich people should be paying more.

“That’s why I’m for a tax system in which, if you have more money, you pay a higher percentage in taxes. And I think the rich should pay more than they currently do, and that includes Melinda and me.”

Increasing the tax burden on the upper 1% has been a hot topic recently with many of the Democratic presidential candidates. Senator Elizabeth Warren (D-MA) has already released her “Ultra-Millionaire” tax plan, and Senator Bernie Sanders (D-VT) his own wealth tax proposal.

So, it is no surprise that Gates would have taxes on his mind as he reviews the past year. The multi-billionaire admits that he benefits from the “gross inequities” and realizes that he is among the “lucky” people of the world. Gates says, “I have immense privileges as a result of this inequality.”

He uses his blog post to state his views on increasing the tax burden for the wealthiest people in the country:

“I start with the understanding that the U.S. government simply does not bring in enough money to meet its obligations. This isn’t a value judgment; it’s just a fact. The government collects about 20 percent of GDP in taxes while spending about 24 percent. And the cost of commitments is going up.

Meanwhile, the wealth gap is growing. The distance between top and bottom incomes in the United States is much greater than it was 50 years ago. A few people end up with a great deal—I’ve been disproportionately rewarded for the work I’ve done—while many others who work just as hard struggle to get by.”

What is Bill Gates proposing?

Gates admits that he is not an expert on tax code, but he does have a few ideas on the various ways people like him could start paying a fair share of the tax burden.

He suggests:

  • Raising the capital gains tax until it is on par with the labor tax.
  • Raising the estate tax and closing loopholes “many wealthy people take advantage of”
  •  Removing the cap on how much income can be taxed for Medicare
  • Close the carried-interest loophole
  • Taxing large fortunes that have been held for 10+ years

All of those ideas are for taxation at the federal level, but Gates also thinks there is room for improvement at the state and local levels as well.

One of the big arguments against taxing the top tier is that is will deter innovation. Gates shuts down that theory with ease:

“Americans in the top 1 percent can afford to pay a lot more before they stop going to work or creating jobs. In the 1970s, when Paul Allen and I were starting Microsoft, marginal tax rates were almost twice the top rate today. It didn’t hurt our incentive to build a great company.”

 

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