NY Times editorial: The billionaires are nervous


Yesterday, Bill Gates diplomatically suggested that he thought Elizabeth Warren’s six percent wealth tax might be taking things too far at a conference hosted by the NY Times. Today the NY Times editorial board scolded him for saying so. Here’s their misleading opener:

When Bill Gates founded Microsoft in 1975, the top marginal tax rate on personal income was 70 percent, tax rates on capital gains and corporate income were significantly higher than at present, and the estate tax was a much more formidable levy. None of that dissuaded Mr. Gates from pouring himself into his business, nor discouraged his investors from pouring in their money.

Microsoft was founded in 1975, but at the time almost no one had heard of it. The company didn’t have its big breakthrough with MS-DOS until 1980, around the time that America was electing President Reagan to the White House. And one of the first things Reagan did in 1981 was sign a bill that lowered income tax rates from 70 percent to 50 percent. Reagan and Congress would later lower income tax rates again in 1986 to a maximum of 28 percent right around the time Microsoft created the first version of Windows. I guess it’s possible Microsoft could have been a success even if the dismal economic record of the Carter years had continued into the 1980s but that’s not what happened. More from the Times’ editorial board:

The federal government needs a lot more money. Decades of episodic tax cuts have left the government deeply in debt: The Treasury is on pace to borrow more than $1 trillion during the current fiscal year to meet its obligations. The government will need still more money for critical investments in infrastructure, education and the social safety net.

This is not an endorsement of the particulars of Ms. Warren’s tax plan. There is plenty of room to debate how much money the government needs, and how best to raise that money. The specific proposals by Ms. Warren and one of her rivals, Senator Bernie Sanders, to impose a new federal tax on wealth are innovations that require careful consideration.

It’s certainly true that we’re running deficits that seem unwise and creating a debt that seems worrisome. However, as the editorial board eventually admits, Bill Gates is a supporter of higher taxes on the rich. He specifically said yesterday that if his taxes were doubled he’d be fire with that. So the issue here is not that Gates is being a stingy rich guy. The issue is that what Elizabeth Warren and Bernie Sanders are proposing is to take a nation that is already spending well beyond its means and to commit to spending an additional $3 trillion or more per year.

It’s pretty astounding that the Times would raise concern about the deficit in once paragraph and then shame someone who criticizes a plan to massively increase government spending in the next paragraph. If there’s “room to debate this” why is the editorial board scolding someone who tries to debate it by suggesting there should be a middle ground, which is exactly what Gates suggested: “I happen to believe something in the middle.” Gates did say that it was possible “if you tax too much you do risk the capital formation, innovation.” That’s something even the Times admits:

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There is no doubt that it is theoretically possible to raise taxes to prohibitive heights: If people had to pay a tax of 100 percent of the next dollar they earned, they would be likely to call it a day.

But the alarm bells are out of all proportion with Ms. Warren’s plan. Describing his concerns on Wednesday, Mr. Gates at one point suggested he might be asked to pay $100 billion.

At this point, the Times, which earlier said it’s not trying to defend Warren’s tax plan, links to a page on Warren’s website that estimates Bill Gates would pay $6.3 billion next year under her wealth tax. That’s $6.3 billion additional tax on top of whatever else he’s already paying.

Als I pointed out yesterday, that figure is probably not a full accounting. It may be accurate for just the wealth tax portion of Warren’s plan, but there are other taxes she’s proposing that might hike Gates’ bill closer to $15 billion in a single year. That’s not $100 billion but it could add up to something in the ballpark over a decade.

The NY Times editorial board could have pointed all of this out but of course it really just wants to scold the rich guy and defend Elizabeth Warren’s tax plan, so it doesn’t bother. When you start from the position that Sanders and AOC do, i.e. that billionaires are immoral, there’s really no defense of them keeping any of their money anyway. The NY Times editorial board seems eager to defend their ‘eat the rich’ mentality.

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