Bill Gates backs capital gains tax as the best way to exploit ‘big fortunes’

Bill Gates is concerned about the high budget deficits in the United States and has said that if taxes are eventually raised to make up for the shortfall, then it would be appropriate for the wealthy to pay much higher taxes.

“We only collect about 20% of GDP and we spend about 24% of GDP. So you can’t let this deficit grow faster than the economy,” the world’s second-richest man said during an interview on CNN’s “Fareed Zakaria GPS” program on Sunday. The US national debt topped $22 trillion last week.

Proposals have been circulating recently that the wealthiest Americans will once again face a top marginal tax rate of 70%, as they did for much of the 1970s before it was lowered by the President Ronald Reagan, and for other wealth-focused measures to address rising income inequality in the United States.

Freshman Democratic Rep. Alexandria Ocasio-Cortez of New York suggested “tax rates as high as 60 or 70 percent” on “tippy tops — on your 10th million dollars.”

But Gates said that approach didn’t work well in practice.

Progressive taxes

“Even when that rate was high, the actual collection because of the means people could differ was not — never exceeded 40%, in fact,” the Microsoft Corp co-founder said.

“If you’re doing this additional collection, of course you want to be progressive, you want the share that comes from the top 1% or top 20% to be much higher,” he said. “Big fortunes, if your goal is to achieve them, you have to take the capital gains tax, which is well below 20%, and increase it.”

Taxing capital gains income and ordinary income at the same rates would eliminate a lot of complexity, said the philanthropist, who has a net worth of $97.2 billion, according to the Bloomberg Billionaires Index. Hedge funds tend to try to shift their tax liabilities to the capital gains column.

“And so, you would simplify that,” Gates said.

‘No free lunch’

Other tax plans introduced recently include that of Senator Elizabeth Warren of Massachusetts, the 2020 Democratic presidential candidate, for a 2% levy on household wealth over $50 million and 3% on wealth. greater than $1 billion. And Senator Bernie Sanders of Vermont has proposed raising estate taxes on wealthy Americans as he eyes a second run for the White House.

Overall, the expansion of government programs was “good, but it just highlights that there’s no free lunch here; more money should be raised,” the tech billionaire said.

Gates and his wife Melinda started a private foundation. The Bill and Melinda Gates Foundation had $51 billion in endowment assets at the end of 2017. From 1994 to 2017, the couple gave more than $35.8 billion to their foundation.

He said he had been “the biggest supporter of having the inheritance tax raise more money.” It was 55%, it’s now down, with a much larger deduction.

Widening of the deficit

The U.S. budget deficit widened to $319 billion in the first three months of the government’s fiscal year as spending rose and revenue was little changed, the Treasury Department said on Feb. 13. The deficit increased by 42% between October and December. compared to the same three months of the previous year.

According to the Congressional Budget Office, the US national debt is expected to continue to rise, topping $1 trillion a year by 2022, fueled in part by the president’s $1.5 trillion tax cut program Donald Trump and the increase in public spending.

The Trump administration and Republican lawmakers who passed the 2017 tax plan said the measures would spur economic growth, offsetting lost tax revenue.

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