(Marketwatch) Bill Gates, the billionaire founder of Microsoft, doesn’t have a problem with the idea of raising taxes on the rich, but he also believes “extreme” proposals like Rep. Alexandria Ocasio-Cortez’s 70% marginal tax rate on income over $10 million are “missing the big picture.”
‘You wouldn’t want to just focus on the ordinary income rate. People who are wealthy have a rounding error of ordinary income.’
That’s Gates explaining to The Verge in a podcast this week how the world’s richest people hardly rely on a salary. Instead, they raise their cash by selling investments, which isn’t taxed as income.
“It has nothing to do with the 39.6% marginal ordinary income rate,” said Gates, who pointed out that the top 400 earners in the U.S. pay something like a 20% tax rate. “So it’s a misfocus. If you focus on that, you’re missing the picture.”
There are better ways to increase tax revenue, than the “so beyond” approach taken by politicians like Ocaso-Cortez, he added.
“We can be more progressive, the estate tax and the tax on capital, the way the FICA and Social Security taxes work,” he said. “We can be more progressive without really threatening income generation.”
The notion of raising taxes on the wealthy has gained momentum lately thanks to the likes of Ocasio-Cortez and presidential hopeful Sen. Elizabeth Warren, whose plan would slap a new tax on households worth $50 million or more
According to a recent Politico poll, 76% of registered voters in the U.S. think the wealthiest Americans should pay more, with 61% approving of Warren’s “wealth tax.” Ocasio-Cortez’s proposal saw support of 45% vs. 32% who opposed the idea.