Bill Gates: 'Extreme' Politicians Pushing For 70% Tax Rate Are 'Missing The Picture'

It was only a matter of time before one of the world's richest individuals commented on the latest debate sweeping Wall Street and Main Street: whether a 70-percent tax rate on the uber wealthy is the right thing to do.

What Happened

The world's second-richest person, Microsoft Corporation MSFT co-founder Bill Gates, told The Verge in a podcast this week that a "more progressive" tax formula for the wealthy is needed.

Gates is worth $96.7 billion, according to Forbes. 

The landscape today is dominated by "extreme" politicians who are calling for a 70-percent tax bracket for those with income over $10 million, Gates said.

The majority of the gains made by the world's richest individuals come from selling stock and other assets, Gates said during "The Vergecast" interview. Since this is not taxed as regular income, it is only rational that the top 400 earners in the U.S. pay a 20-percent overall tax rate versus the 39.6-percent "marginal ordinary income rate."

"So it's a misfocus," Gates said. "If you focus on that, you're missing the picture."

Why It's Important

Gates' comments were not directed at any one politician, although according to CNBC he was referencing rookie Rep. Alexandria Ocasio-Cortez when he mentioned tax proposals he termed "so extreme" and "beyond" reasonable.

"You do start to create tax dodging and disincentives, and an incentive to have the income show up in other countries and things," Gates said. "But we can be more progressive without really threatening income generation — what you have left to decide how to spread around."

What's Next

Gates' conversation about the future of tax policy is more aligned with Sen. Elizabeth Warren's proposals for taxing households with a net worth of more than $50 million, CNBC said. Gates is in favor of governments focusing on estate, capital and Social Security taxes, the report said. 

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Photo by Kuhlmann/MSC via Wikimedia.