Bill Gates' father: 'Rich people aren't paying enough' in taxes

Software billionaire's dad spearheading state tax initiative in Washington; 'not fair'

May 20, 2010 @ 8:12 am

Bill Gates's father wants the Microsoft Corp. co-founder to pay more in income taxes.

Bill Gates Sr., a retired Washington state lawyer, supports a proposed ballot initiative that would require the state's highest earners including himself and his son to pay an income tax. Washington now collects no personal income taxes.

“Poor people and middle-income people are paying too much to support the state and rich people aren't paying enough,” Gates Sr. said in an interview yesterday in Seattle. “That's the starting point for me.”

The proposed tax on individuals earning more than $200,000 a year and couples earning more than $400,000 would raise $1 billion a year to fund education and health care. While targeting the highest earners, the measure would ease the burden on homeowners with a 20 percent reduction in state property taxes and eliminate the business-and-occupation tax for 80 percent of enterprises in the state, backers say.

Proponents begin collecting signatures today to put proposed Initiative 1098 on the state's November ballot, amid opposition from critics who say a new tax will discourage spending and investment.

“The last thing our state needs is more job-killing taxes in the middle of a recession,” said Luke Esser, chairman of the state Republican Party.

Gates Sr., 84, turned to philanthropy and social causes after retiring from the Seattle law firm Preston Gates & Ellis LLP in 1998. He chaired a state panel that recommended introducing a flat-rate personal income tax in 2002 to reduce the state sales tax and eliminate property taxes, and advocated estate taxes in a book he co-authored, “Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes” (Beacon Press, 2003).

People in the bottom fifth of the state's tax brackets pay 16 percent of their income toward state and local taxes, while those in the top 1 percent pay only 2.5 percent, he said.

“It's just not fair,” he said.

Education in the state is languishing, with spending per pupil ranking No. 46 in the country, Gates Sr. said.

Money raised in the initiative would go into a trust fund to increase teacher salaries, pay for new buildings, support early learning and reverse cuts to state universities, Gates Sr. said. The proceeds also would fund public health and long-term care for seniors.

Gates Sr.'s own father owned a furniture store in Bremerton, Washington, an hour's ferry ride from Seattle. While his father was comfortable, “he was not making a lot of money and I think the credits we've provided in this initiative would have probably taken him out from under paying anything,” Gates Sr. said.

His son, William H. Gates III, whose net worth was estimated at $53 billion by Forbes magazine in March, ranking him as the world's second-richest person, hasn't decided whether to support the initiative, the elder Gates said.

“We've talked about it; he goes to the left and he goes to the right and I'm not too sure where he comes out,” Gates Sr. said. “He is the face and voice on quite a number of causes and has no anxiety to add another controversial cause to his list.”

Individuals would pay a 5 percent tax on income over $200,000 and 9 percent over $500,000. Couples would pay 5 percent over $400,000 and 9 percent over $1 million.

It's only a matter of time before the income tax is expanded to other income brackets, the Seattle Times said in an April 24 editorial. It called the measure “the seed of a big, big thing” and advised: “Think twice before planting it in Washington.”

The measure includes a provision that says the taxes can't be changed without another vote, Gates Sr. said.

Initiative 1098 was co-authored by the Economic Opportunity Institute, a non-profit group in Seattle, and has drawn funding from the Service Employees International Union, said Sandeep Kaushik, a spokesman for the I-1098 campaign. Gates Sr. agreed to serve as the public face, visiting business groups and unions to solicit support.

“Anywhere there are more than three people who will sit and listen to me,” Gates Sr. said.

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