Bill Gates in favor of raising the capital gains tax

With budget deficits running high in the US and the national debt reaching a staggering $22 million last week, the outspoken billionaire Bill Gates has recommended looking towards capital gains to get the wealthy to pay higher taxes. Increase of tax burdens on the rich has become a fascinating debate in recent times, with proposals ranging from Congresswoman Alexandria Ocasio-Cortez' (D-NY) call for a top marginal tax rate of 70%, to Senator Elizabeth Warren's (D-MA) 2% wealth tax plan, to Senator Bernie Sanders (I-VT) vocal support of raising the estate tax. Gates' proposal for the capital gains tax hence joins the rest in what will likely be a hot topic in the next election cycle.

Gates argues that if we want to see the top 1 percent paying a larger chunk of the taxes as in a progressive system, the goal should be to raise the capital gains tax which is at 20% right now. By ending the divide between capitals gains income and ordinary income, i.e. that former being taxed at the rate of the latter, the tax system will not just become simpler but also raise greater amounts to help lower the budget deficit. This will happen because as of now, tax liabilities tend to get shifted to the capital gains column by hedge funds. While this is an interesting take on taxing the rich, it can be argued (in an overgeneralized manner) that this will only discourage savings and investments in the US. However, it might just garner support for equalizing the rates of income and capital gains taxes, and not just simplifying the tax system but also getting more taxes from those at the top. In any case, the debate on these various tax proposals in the coming months is certainly something that needs to be followed.

Article link: https://www.bloomberg.com/news/articles/2019-02-17/gates-says-capital-gain-taxes-best-way-to-tap-big-fortunes