Should billionaires exist?
That question is getting serious attention thanks to liberal officials raising the alarm over wealth concentration.
It’s become such a hot-button issue that Late Show host Stephen Colbert posed the question to Bill Gates, the Microsoft co-founder who was the world’s richest man for years. Appearing with his wife, Melinda Gates, he admitted, “we might be biased.”
On how to tax the rich: Bill Gates said we could “make the tax system take a much higher portion from people with great wealth,” which prompted Colbert to ask if 70 percent was appropriate. That number has been floated by U.S. Rep. Alexandria Ocasio-Cortez’s as marginal tax rate on people earning more than $10 million per year. Her idea? Wealthy people would be subject to a 70 percent tax on the dollars earned above the $10 million threshold.
Bill and Melinda Gates said that plan might not have the desired effect because it targets traditional income. The megawealthy often earn their fortunes through other assets outside their regular paychecks.
“These great fortunes were not made through ordinary income,” Bill Gates said. “So you probably have to look to the capital gains rate and the estate tax if you want to create more equity there.”
Melinda Gates chimed in, adding that marginal tax rates don’t always accomplish their goal, citing countries like France where “taxes have been done there in such a way that it doesn’t actually stimulate good growth.”
On the role of philanthropy: The two agreed that taxes should be higher on the wealthy but also touted the role of philanthropy, where they have channeled their enormous fortune through the Bill and Melinda Gates Foundation.
“Philanthropy can never make up for taxes, but it is that catalytic wedge where we can try things, we can do innovations that you wouldn’t want your government to do with tax dollars,” Melinda Gates said. “But then it has to be government that scales up things like health or education.”
The big picture: America’s mega-rich haven’t held this much of the country’s wealth since just before The Great Depression, according to new research. Driven largely by massive wealth accumulation in the tech and financial sectors, income inequality is a key issue in D.C. and is likely to pick up steam as we approach the 2020 presidential election.
Progressive lawmakers are starting to target philanthropy, claiming it distracts from government programs designed to rebalance the economic scales. Bill and Melinda Gates have pledged to donate the majority of their wealth to philanthropic causes, which Colbert said is “the sort of behavior people want from billionaires.” That may be changing. Philanthropy, though laudable, is at the whim donors. A new analysis shows that in 2018, America’s most generous billionaires donated about half of what they gave the previous year to philanthropy.