During an interview with CNBC’s Becky Quick, Gates said when people defend capitalism it is often assumed he or she is “defending the tax rates we have today.”
“Socialism used to mean that the state controlled the means of production and a lot of people who are promoting socialism actually aren’t using that classic definition,” Gates said. “Most people really aren’t arguing against capitalism … most people are just saying that taxes should change.”
It is well known that Gates is a proponent of making the tax system more progressive, including raising taxes on the wealthy. He has said that while he has paid $10 billion in taxes, he should be paying more. He has also advocated for reforming the estate and capital gains taxes.
At the same time, he has said proposals – like that from New York Rep. Alexandria Ocasio-Cortez – to raise the top tax rate to 70 percent to fund social programs are a “misfocus,” because they can create tax dodging incentives.
“You finally have some politicians who are so extreme that I’d say, ‘No, that’s even beyond,’” Gates told The Verge earlier this year. “You do start to create tax dodging and disincentives, and an incentive to have the income show up in other countries and things.”
The capitalism vs. socialism debate is gaining traction in the run-up to the 2020 election, sparked in part by a number of lawmakers identifying themselves as “Democratic socialists,” and a growing list of proposals to expand government programs – like Medicare – to take over roles currently filled by the private market.
There have also been some calls from progressive Democrats to create programs similar to a universal basic income (UBI), where an individual receives a check from the government each month, condition-free.
Entrepreneur Andrew Yang – who is running for president in 2020 – has proposed a universal basic income scheme to create a "trickle-up" economy.
When asked about UBI earlier this year, Gates said the U.S. is “not rich enough to give up work incentives.”
Billionaire investor Warren Buffett also chimed in during the interview to defend the role of the free market and the effectiveness of the private sector, identifying himself as a “card-carrying capitalist.”
Buffett said that while most U.S. lawmakers probably want the same outcomes, they have different ways of going about accomplishing those goals.