French economist Thomas Piketty says the world’s richest man loves everything about his 2014 book, Capital in the Twenty-First Century. That is, except for the part about how the rich should pay more in taxes.
Piketty said Saturday at a conference in Boston that Microsoft co-founder Bill Gates (yes, he’s still the world’s richest man) recently told the economics professor that he didn’t want to pay more in taxes, as Gates believes he can spend his money in “more efficient [ways] than the government.”
“He told me, ‘I love everything that’s in your book, but I don’t want to pay more tax,’” Piketty said, according to Bloomberg News. Piketty’s book, which was recently named the best business book of 2014 by The Financial Times, argues for a global tax on wealth to help offset growing levels of inequality.
Piketty, who teaches at the Paris School of Economics, conceded that the philanthropic Gates might sometimes spend his money in better ways than the government otherwise would. “You know, maybe he is [more efficient than the government] sometimes,” Piketty reportedly said.
In a 1,700-word review of Piketty’s book published to his personal blog in October, Gates wrote that he agreed with many of Piketty’s “most important conclusions,” including that “[h]igh levels of inequality are a problem” and “[c]apitalism does not self-correct toward greater equality.” But Gates also took issue with one of the book's central arguments: that governments should look to more aggressively tax capital to combat capitalism’s inherent tendency toward higher levels of inequality.
“I agree that taxation should shift away from taxing labor,” Gates said in his review. “But rather than move to a progressive tax on capital, as Piketty would like, I think we’d be best off with a progressive tax on consumption.”
Gates argued in the essay that Piketty wrongly lumps the wealthy into a single group, rather than considering how each rich person spends his or her wealth. He painted a hypothetical portrait of three wealthy people: “One investing in companies, one in philanthropy, and one in a lavish lifestyle.”
“There’s nothing wrong with the last guy," Gates wrote, "but I think he should pay more taxes than the others."
It’s not hard to see where Gates thinks he fits in in the above example. Since taking on a reduced role at Microsoft, Gates has devoted himself almost entirely to philanthropy. The charity he runs with his wife, the Bill & Melinda Gates foundation, has handed out more than $30 billion in grant payments over the years to help fight hunger and poverty.
“Philanthropy also can be an important part of the solution set,” Gates wrote toward the end of his review of Capital. “Philanthropy done well not only produces direct benefits for society, it also reduces dynastic wealth.”
Emails and phone calls seeking comment from the Bill & Melinda Gates Foundation were not immediately returned. An email to Piketty was also not immediately returned.