Bill Gates, one of the richest people in human history, recently added his voice to the growing chorus of those lamenting growing wealth inequality. He did so in a recent post on his personal blog commemorating the new year, sharing his thoughts and ideas on the subject of "how we can make our tax system more fair."
In the post, Gates says that he's long been a proponent on higher taxes for people like him, with large amounts of wealth to spare:
"The truth is, I've been pushing for a fairer tax system for years. It was nearly two decades ago that my dad and I started calling for an increase in the federal estate tax and for an estate tax in our home state of Washington, which has the most regressive tax system in the country. In 2010, he and I also backed a voter initiative that—had it passed—would've created a state income tax."
But he also says that the problem of wealth inequality has gotten worse rather than better in recent years:
"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."
Gates writes that the solution for this problem that he favors is a system that works like this: "if you have more money, you pay a higher percentage in taxes." And he acknowledges that it's not a simple matter of taxing income at higher rates, but by taxing capital gains at comparable rates:
"Today the U.S. government depends overwhelmingly on taxing labor—about three quarters of its revenue comes from taxes on wages and salaries. Most people get almost all of their income from salary and hourly work, which is taxed at a maximum of 37 percent. But the wealthiest generally get only a tiny percentage of their income from a salary; most of it comes from profits on investments, such as stock or real estate, taxed at 20 percent if they're held for more than a year."
He goes on to say that this disparity is "the clearest evidence I've seen that the system isn't fair," and that in addition to raising gains on capital taxes, he's also in favor of raising the estate tax on inherited wealth and closing its loopholes.
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As you might expect, Gates knows he'll face criticism for calling for higher taxes, such as the tweet below:
Misleading headline. Bill Gates is calling for higher taxes on everyone but Bill Gates. He avoids calling for a wealth tax, which is what would hit him, and he seeks to preserve his ability to get billions of tax subsidies for his tax-free foundation. https://t.co/EikT3FL906
— Matt Stoller (@matthewstoller) January 3, 2020
But he even provides a counterargument to the old standard, "why don't you just give more of your own money away if you want to so bad?" Here it is:
"When I say the government needs to raise more money, some people ask why Melinda and I don't voluntarily pay more in taxes than the law requires. The answer is that simply leaving it up to people to give more than the government asks for is not a scalable solution. People pay taxes as an obligation of law and citizenship, not out of charity. Additional voluntary giving will never raise enough money for everything the government needs to do. If Melinda and I signed over our foundation's entire endowment to the state of California, it wouldn't be enough to fund their public schools for even one year. A vibrant economic system depends on setting expectations for who pays how much."
Now, only time can tell whether the efforts of Gates and others will turn the tide on the way the wealthy are taxed in the US and elsewhere.
