Gates agrees with his dad's estate tax crusade
- — 14 May, 2001 09:59
"It's something which we have talked about over time even before the threat to repeal came along," said Bill Gates Sr. in a speech at the National Press Club. "He made it clear that he had no intention of passing any significant part of his wealth on to his children. He will give the money to the (Bill and Melinda Gates) foundation."
In 1998, the tax, enacted 85 years ago with the goal of breaking up large fortunes and prevent wealth from accumulating in the hands of a few families, affected the estates of only about 2 per cent of the people who died. But a greater proportion of the population is expected to be affected in the future, including many IT workers whose personal wealth has ballooned over the past decade.
The tax, which currently kicks in on estates valued at more than $US675,000 and can claim as much as 55 per cent, has been targeted for repeal by Republican leaders in Congress and by President Bush, who cite cases in which the tax has forced the survivors of farmers and small business owners to sell the assets in order to pay the tax.
Bill Gates Sr. was enlisted recently to speak against the tax by an organisation that lobbies Congress for equitable taxation in the US. Repeal of the tax was the main topic of his speech on Friday.
Gates' personal wealth is estimated at $US78 billion as of Friday, according to a Web site titled "Bill Gates Personal Wealth Clock" sponsored by Philip Greenspun, chairman of ArsDigita. Taxed at 55 per cent, his estate would pay $US43 billion to the government, more than twice the estimated $US20 billion the US collected from the estates of about 47,400 wealthy Americans who died in 1998 and whose estates were large enough to trigger the tax.
Nevertheless, Bill Gates Sr. believes in maintaining the tax because he says repealing it would create an even wider gulf between the haves and the have-nots.
"I believe it's a simple matter of wealthy people trying to increase the amount of wealth they have and the amount they can pass on," Gates said. Farmers and small business owners have become the "poster children" on the issue, and their problems could be fixed with minor modifications to the tax, he said.
Repealing the tax would create a "significant danger for our society," the elder Gates said. The estate tax is "the purest example of progressive taxation" that helps to level the playing field, and he argued that if it were repealed the lost revenue would have to be recouped elsewhere, probably through income tax collected off people who aren't as well equipped to pay as the wealthy are.
Gates, a lawyer, however, has not been successful in convincing Congress not to alter the tax. Last month the House passed a bill that would eliminate the estate tax entirely by 2011.
Gates also spoke about the goals of the Bill and Melinda Gates Foundation, which currently has assets of $US23 billion and of which he is co-chairman. The foundation has made global health and vaccinations against preventable diseases its chief cause. Asked why the foundation is more committed to issues outside the US than to domestic issues, Gates defended the foundation's decision to spend money to save children who die from diseases for which there is a vaccine.
"One of the questions my daughter-in-law, Melinda, always asks is, 'does it matter where a child dies?'" Gates said.