WASHINGTON ¨C Bill Gates is concerned about the high budget deficits being run by the U.S., and said if taxes are ultimately increased to make up the shortfall, then it¡¯s appropriate for wealthy people to pay much higher taxes.
¡°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,¡± the world¡¯s second-richest man said during an interview on CNN¡¯s ¡°Fareed Zakaria GPS¡± broadcast on Sunday.
Proposals have circulated recently for the richest Americans to again face a top marginal tax rate of 70 percent, as they did during much of the 1970s before it was lowered by President Ronald Reagan. But Gates said that approach didn¡¯t work well in practice.
¡°Even when that rate was high, the actual collection because of ways people could defer wasn¡¯t ¡ª never got above 40 percent, actually,¡± the Microsoft Corp. co-founder 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.¡±
Taxing capital gains income and ordinary income at the same rates ¡°would get rid of a lot of complexity, because whenever those rates vary, you want to make one look like the other,¡± said the philanthropist, whose net worth is estimated at $97.2 billion. Hedge funds tend to try to shift their tax liabilities over to the capital gains column.
¡°And so, you would simplify that,¡± Gates said.
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