As the growth of the national debt (which, as we’ve repeatedly pointed out, eclipsed $22 trillion last week) accelerates, and America’s ascendant Democratic Socialists like Alexandria Ocasio-Cortez push for draconian taxation plans like a 70% marginal rate for the wealthiest Americans, the wealthiest titans of industry have remained largely absent from the taxation debate (though, to be fair, Jeff Bezos has been understandably preoccupied lately).
But just in case Americans – at least those who didn’t attend Davos 2019 – were wondering what their richest tech overlords were thinking about the best practices for stabilizing the budget deficit with new tax revenues, Microsoft founder Bill Gates appeared on CNN’s Fareed Zakaria GPS last night to share his thoughts on the 70% marginal rate proposal and other ‘wealth tax’ proposals floated by the increasingly left-leaning Democratic field, which he has bashed as “extreme” in other interviews.
“We only collect about 20 percent of GDP and we spend like 24 percent of GDP. So you can’t let that deficit grow faster than the economy,” Gates said.
But a 70% marginal rate on the richest Americans – just like we had in the 1970s before the Reagan tax cuts – isn’t the best way to go about filling this gap, because of all the loop holes and deferments.
“Even when that rate was high, the actual collection because of ways people could defer wasn’t – never got above 40 percent, actually,” the Microsoft Corp. co-founder said.
If AOC and her merry band of “Democratic Socialist” followers truly want to go after the biggest fortunes, the best way to do that would be to hike taxes on capital gains – a proposal that was bandied about during the Trump tax reform debate, but didn’t ultimately make it into the final package. Taxing capital gains at the same rate as ordinary income would eliminate a lot of complexity, Gates said.
“If you go about doing this additional collection, of course you want to be progressive, you want the portion that comes from the top 1 percent or top 20 percent to be much higher,” he said. “The big fortunes, if your goal is to go after those, you have to take the capital gains tax, which is far lower at like 20 percent, and increase that.”
Gates added that he and his wife Melinda were among the biggest proponents of raising the “death tax”, a proposal that Bernie Sanders is now reportedly kicking around.
He said he’d been “the biggest proponent of having the estate tax collect more money. It was at 55 percent, it’s now down from that, with a much bigger deduction.”
But luckily for the hedge fund set, before AOC can push for hiking the capital gains rate, she would first need to figure out what it is.
Watch the full video below: