Bill Gates’s criticism of Elizabeth Warren’s wealth tax plan is likely to be a problem for the Democratic 2020 presidential hopeful, far more of a problem than if it had come from another billionaire.
Warren’s first issue is Gates’s moral authority. Speaking on Wednesday, Gates observed that “I’m all for super-progressive tax systems, I’ve paid over $10 billion in taxes. I’ve paid more than anyone in taxes. If I had to pay $20 billion, it’s fine.” But, Gates continued, “when you say I should pay $100 billion [in taxes], then I’m starting to do a little math about what I have leftover. You really want the incentive system to be there without threatening that.”
Now, Warren could normally counter this criticism with a variation on the line that “this is just another greedy billionaire who doesn’t want to pay their fair share.” But that’s far harder to do with the Microsoft co-founder.
After all, Gates isn’t an evil banker or real estate tycoon, he’s widely known as one of the world’s leading philanthropists. Seeing as Gates gave at least $28 billion to charity by 2013, and donated nearly $5 billion to charity last year alone, it’s fair to assume he has donated in the region of $50 billion total.
As Gates mentioned, he’s paid more than anyone in taxes. Perhaps he’s given more money to charity than anyone else, too.
So, even if they don’t know the exact sums he has donated, voters do know that Gates is a generous guy. That helps explain why a 2019 YouGov poll found that Bill Gates is the most admired man in the world.
That means Gates’s very existence undercuts Warren’s class warfare, liberal intellectual narrative!
Gates is a billionaire who provides both economic and social benefit; in terms of Microsoft’s product provision and morally, in terms of his charitable work. He thus proves that it is possible to be very rich and very decent, rather than necessarily greedy.
The second challenge for Warren is Gates’s simple but persuasive intellectual quality.
Observing that the United States has one of the most progressive income tax systems in the world (we really do), Gates has a justifiable concern about being taxed even more. Warren’s wealth tax would charge households worth between $50 million and $1 billion at a rate of 2% every year, and households worth more than $1 billion at 6%. If, as is estimated, Gates is worth around $100 billion, he faces a big annual tax bill on top of his income and corporate taxes. $100 billion worth would mean $6 billion in wealth taxes the first year, $5.64 billion the second year, $5.3 billion the third year, and so on — until Gates had lost vast quantities of wealth which, by virtue of his risk-taking, hard work, and intellect, he had justifiably earned.
Ultimately, Gates makes Warren’s argument seem mathematically unfair as well as moral. And that’s before we even get into the harm it will have on innovation and risk-taking. Gates’s character allows him to offer this message in a way that Warren cannot easily rebut.
Disclosure: I own some Microsoft stock.
