The year 2019 saw Bill Gates reclaim his title as the world’s richest person from Jeff Bezos — and come under harsher scrutiny than ever amid a new, powerful backlash against the billionaire class and the economic system that produces extraordinary wealth like his.
In an end-of-year retrospective, Gates — who ended the year with a net worth of $110 billion — sounds like he’s taken the critiques of the billionaire class to heart. His conclusion? We should absolutely have higher taxes on the rich. It’s not a new position for him (he has stated his support for higher taxes in the past), but noteworthy as the topic of a year-end wrap-up. (It’s also worth noting that, a couple of months ago, Gates was the target of Twitter derision when he made a joke about not wanting to pay a big wealth tax — a moment that was taken out of context and led to some social media piling on.)
“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,” Gates writes. “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.”
He proposes a wide range of ways to make higher taxes on the rich a reality, many of them ideas he’s suggested before: raising the capital gains tax, raising the estate tax, removing the cap on income subject to Medicare taxes, closing the carried-interest loophole that mostly lets savvy investors pay less in taxes, and taxing large fortunes (he prefers to tax them once they’ve been held for a long time, such as 10 years).
None of these are unique ideas, and many of them have been proposed by tax policy experts (which, Gates admits, he isn’t). They’re also strikingly similar to proposals that have been raised in the Democratic presidential primary (though Gates writes that he “will not take a position on the proposals that are being debated during this campaign season”).
Deservedly or not, Gates has a lot of influence in our national conversation about the ultrarich and what they do, so it’s significant to have him among the prominent billionaires pushing for higher taxes and rebutting many of the arguments that such taxes would be unfair to the rich or discourage innovation. Taxes, Gates points out, were much higher when he founded Microsoft, which didn’t get in the way of his motivation to start the company.
“A dynastic system where you can pass vast wealth along to your children is not good for anyone; the next generation doesn’t end up with the same incentive to work hard and contribute to the economy,” Gates writes, defending higher estate taxes. And the difference between capital gains taxes and income taxes “favor wealth over work,” with no good justification.
Still a role for philanthropy
Where does that leave another target of criticism in recent years: billionaire philanthropy?
Gates is one of the world’s biggest and most effective donors to global health and development. Gates observes — correctly — that the US government operates at a far larger scale than the Gates Foundation, and that even the richest person in the world can’t solve the US’s social problems singlehandedly. “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,” he writes.
The upshot is, problems like that must be solved with tax policy, not with individual donors.
Despite all that, Gates sees a role for individual donors like him in our society.
Melinda and I think there’s value to society in allowing the wealthy to put some money into private foundations, because foundations play an irreplaceable role that’s distinct from what governments do well. In particular, philanthropy is good at managing high-risk projects that governments can’t take on and corporations won’t—for example, trying out new approaches to eradicating malaria, which is something our foundation is working on. If a government tries an idea for improving global health that fails, someone wasn’t doing their job. Whereas if we don’t try some ideas that fail, we’re not doing our jobs.
In many ways, Gates represents a deeply unusual billionaire when it comes to philanthropy, both because of how much of his wealth he has given away and because of how effectively he’s spent it. The vast majority of billionaires don’t spend their money nearly as well as household names like Gates and Warren Buffett. It’s notable that the billionaires who give the most are also among those most supportive of tax reforms that would have them paying more — and it’s interesting to see how they view the role of philanthropy in a less billionaire-friendly world.
Even many of philanthropy’s most vehement critics in the last year have argued that there is a place for private giving. In particular, philanthropy can meet needs the government refuses to acknowledge, for example, or run experimental programs that can’t yet justify taxpayer spending.
That means Gates’s stance here is actually not very different from the stance of some of the fiercest critics of foundations, wealth, and philanthropy.
Now if only the rest of his class would join him.
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Kelsey Piper Kelsey Piper https://cdn.vox-cdn.com/community_logos/52517/voxv.png Read More