Microsoft Founder's Father Wants New Tax For Rich

Robert Siegel talks with Bill Gates Sr., the father of Microsoft's founder. Gates is one of the primary sponsors of an initiative in Washington state that would establish a state income tax for wealthier residents.

MELISSA BLOCK, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.

ROBERT SIEGEL, host:

And I'm Robert Siegel.

In an election season when tax cuts seem to be in every candidate's platform, tax increases are on the ballot in the state of Washington. Initiative 1098 would introduce an income tax for the wealthiest people in the state, for individuals making over $200,000 and couples earning over 400,000.

Washington State currently has no income tax, and one major backer of this effort is Bill Gates Sr., father of the Microsoft founder. And he joins us now from Seattle.

Welcome to the program.

Mr. WILLIAMS GATES Sr.: Thank you. Glad to be here.

SIEGEL: And your state, Washington State, does not have an income tax at all right now. Some would say that has contributed to making it an attractive and prosperous place. Why tinker with success?

Mr. GATES: Well, my own view is that these tax things are not the major consideration in where people or businesses locate or don't locate. But we have this long history of the well-to-do in this state paying somewhere around 2 percent of their income to support state and local government while people in the lowest income levels pay 17 percent of their income. Now, that's...

SIEGEL: You mean when you add up all the various taxes that they're paying.

Mr. GATES: That's exactly correct. But the notion of imposing this modest income tax on folks in the top one or one and half percent of our income scale is a perfectly reasonable thing to do. And they're still going to...

(Soundbite of laughter)

Mr. GATES: ...still not going to be paying anywhere near a proportional contribution to the cost of state government.

SIEGEL: What's the rate of the tax on the income?

Mr. GATES: The tax is 5 percent on couples above 400,000 of income until it gets to a million, at which point it's graded up to 9 percent.

SIEGEL: One of the arguments in favor of this measure is that taxes for less wealthy citizens would drop. Given the general state of deficits around the country, is that practical that anyone's taxes are going to drop in the near future?

Mr. GATES: Well, yes. It certainly is in this case. It's a very modest ingredient of this proposition that we would substantially get rid of a thing that's called the business and occupation tax here in so far as it applies to small businesses. We also make a modest adjustment in property tax levels.

SIEGEL: Mr. Gates, you are a prosperous Seattle lawyer, I guess retired from legal practice nowadays. Your son is famously prosperous.

What do you say to people who make a few hundred thousand dollars a year in a household that it's in your interest to pay some more money?

Mr. GATES: Well, we have a serious deterioration and underfunding of our educational services in the state. And there is a sharp need for making more funding available for public education and also for health care services.

SIEGEL: There is an argument against state income tax that only taxes the wealthiest, which is the slippery slope argument. And the federal income tax began taxing only people with the highest incomes. And some observers would say start a tax and, inevitably, it will creep downward, and states need money and put it in place, and maybe people with $200,000 today. It could be people with $50,000 tomorrow.

Mr. GATES: Well, sure. And if you'd look at the case of federal income tax, it once was 90 percent and 70 percent, and it's crept down to 35 percent.

SIEGEL: What goes up actually can come down on occasion here is what you're saying?

Mr. GATES: That's exactly right.

SIEGEL: Mr. Gates, thank you very much for talking with us today.

Mr. GATES: Mr. Siegel, thank you for inviting me.

SIEGEL: Okay, that's Bill Gates Sr. in Seattle, who is an advocate of Washington State's Initiative 1098, which would impose in Washington an income tax on the wealthiest earners in the state.

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