Bill Gates debates Alexandria Ocasio-Cortez 'tax the rich' policy

Microsoft co-founder Bill Gates made some comments this week on the 'tax the rich' ideas making the rounds in America.

Taxing the rich is fine, he said in an interview with The Verge, and "more progressive" taxes on the ultra rich are okay.

Gates then went on to characterize Alexandria Ocasio-Cortez as an 'extreme' politician who is missing the point by focusing on targeting high income brackets.

AOC identifies as a Democratic socialist, and in January 2019 floated the idea of a 70 percent marginal rate on earned income over $10 million.

Gates said in the interview that tax policies should focus on taxing wealth, not income, since the super-rich tend to have wealth in the form of assets, rather than income.

"If you focus on that, you're missing the picture," he said without mentioning AOC by name.

From Nilay Patel at The Verge:

Speaking on The Vergecast this week, Gates said that while marginal tax rates in the United States can be "more progressive" — higher, in other words — there are now some politicians who are "so extreme" that their proposals would lead to wealthy people hiding income and stashing it offshore. That's a clear reference to new members of Congress like Rep. Alexandria Ocasio-Cortez (D-NY), who had just suggested a new top tax rate of 70 percent in the week before Gates sat for this interview.

Gates also said that the world's wealthiest people only have a "rounding error" worth of actual income compared to their wealth — they don't have a lot of salary, but instead sell stocks and other assets to raise cash, which isn't taxed as income anyway. The top 400 earners in the US are only paying something like a 20 percent tax rate, he pointed out. "It has nothing to do with the 39.6 percent marginal ordinary income rate. So it's a misfocus. If you focus on that, you're missing the picture."

But Gates spoke approvingly of a general wealth tax, the estate tax, and changes to Social Security in order to increase tax revenue. "But we can be more progressive, the estate tax and the tax on capital, the way the FICA and Social Security taxes work. We can be more progressive without really threatening income generation."

Gates also took exception to "modern monetary theory," which is an economic theory with growing prominence on the policy teams of Ocasio-Cortez, Bernie Sanders, and others. MMT, as it's known, suggests that governments need not worry about deficits because they can simply print their own currency, and should instead manage inflation with interest rates. (You can read more about it in this Vox explainer.) What does Gates think of MMT?

"That is some crazy talk," he told me. "It will come back and bite you."