New York, Jan 5 (IANS) The world’s second richest person, Bill Gates has stressed that rich people must pay more in taxes so that the growing wealth gap can be bridged.
In a New Year post, Gates said that he is for a tax system in which, if you have more money, you pay a higher percentage in taxes.
“And I think the rich should pay more than they currently do, and that includes Melinda (his wife and cofounder of the Bill & Melinda Gates Foundation) and me,” said Gates who is currently worth $113 billion.
“I’ve been disproportionately rewarded for the work I’ve done,” said the Microsoft founder and philanthropist.
“We’ve updated our tax system before to keep up with changing times, and we need to do it again, starting with raising taxes on people like me,” he said.
The taxes should be spent smartly to “build a healthier, more equitable world for all.”
Gates has some more suggestions on this front.
“We should shift more of the tax burden onto capital, including by raising the capital gains tax, probably to the same level as taxes on labour,” he said.
Most people get almost all of their income from salary and hourly work, which is taxed at a maximum of 37 percent in the US.
“But the wealthiest generally get only a tiny percentage of their income from a salary; most of it comes from profits on investments, such as stock or real estate, taxed at 20 percent if they’re held for more than a year,” lamented Gates.
“That’s the clearest evidence I’ve seen that the system isn’t fair. I don’t see any reason to favor wealth over work the way we do today.”
Gates said he is also in favour of raising the estate tax and closing the loopholes in it that many wealthy people take advantage of.
Other steps, he elaborated, toward a fairer tax system include removing the cap on how much income is subject to Medicare taxes, closing the carried-interest loophole that allows investment-fund managers to pay the lower capital gains rate on their income, and taxing large fortunes that have been held for a long time (say, ten years or more).
“Very wealthy people often have large investments they’ve held for long periods, and if those investments aren’t sold or traded, the money is never taxed. That doesn’t make sense,” Gates noted.
In addition to fair taxes, “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”.