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CNN Live Saturday

Interview With Bill Gates Sr.

Aired January 18, 2003 - 18:46   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


CAROL LIN, CNN ANCHOR: It might strike you as kind of odd that someone with ties to the richest man in the world would actually support the estate tax. That's what you have to pay when you inherit money. Bill Gates' father turned a number of heads when he came out in support of the controversial levy. Bill Gates, Sr. is the co- author of "Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortune." He joins us now from Seattle to talk about his surprising support for the estate tax.
Mr. Gates, good to see you.

BILL GATES SR., AUTHOR, "WEALTH AND OUR COMMONWEALTH": Nice to be here.

LIN: You've got to tell us -- I mean why is it that you would want whatever you would pass on to your heirs, not that he needs the money, but why would you want it taxed, because people have argued that the estate tax is double taxation. You're once again taxing money that has already been taxed and accumulated after a family has worked hard to get it.

GATES: Now this is an extremely fair tax. It seems to us that it's the most opportune time that there could be to have wealthy people in effect reimburse the society that has made possible the enormous pleasure and discretion that they had over the years as a result of having become wealthy. You know, people say they become wealthy because they're so smart or because they work so hard, but in fact, people don't become wealthy in places like West Africa. People become wealthy in society, it's like the United States, where there's order, where there are markets that work, where there's a whole array of provisions from our governments that make it possible.

And we just feel that it's a very fair tax. That you live your life as a wealthy person and at the end of your life, then you've been a substantial tax is in order.

LIN: All right...

(CROSSTALK)

GATES: And it may be better than giving it to the kids, as a matter of fact.

LIN: Well in your case I think your kid's doing pretty well.

GATES: I would say that's all right, and I -- he's not in my will.

LIN: Well, there you go. Well, let me ask you this, though. When you talk about you know returning back to society, isn't that what charity is for?

GATES: That -- yes, I guess it is what charity is for, but it's also what taxes are for.

LIN: I mean what does the estate tax pay for that people need so desperately?

GATES: What does it pay -- well, it's part of the American revenue stream. If it weren't there, it would have to be -- the money would have to be raised in somewhere else. And it's going to be a major producer of revenue...

LIN: Right...

GATES: ... over the next year with...

LIN: Right...

GATES: ... an enormous amount of personal wealth we have in this country today, it's just beginning to perform for the country the way it will.

LIN: That's right and the baby boomers stand to inherit some $10 billions, I read somewhere. But in the meantime, you know, when we talk about wealthy, it's one thing to have the wealth of a Bill Gates, but it's another thing when, you know, a middle class family can mass $1 million pretty easily, especially when you live in a high-cost state like California or New York, where you might have real estate as part of your estate, your home value increases so much. So really, where is the cutoff? I mean if a middle class family is trying to pass on $1 million worth of assets, just like a house, a couple of cars, some jewelry, stock, it's a pretty easy thing to do now, and the estate tax takes up to 60 percent of that. Is that really fair?

GATES: Well, I don't know where you got the 60 percent. That's not true. The rate today is 49 percent, but it is -- in our view it is correct that $1-million amount, which is the amount below, which there is no tax to be paid, it should be increased. The current law will, as the next few years roll along, increase that exemption up to about -- well never mind the about. You know, increase it up to $3 1/2 million per person, which would be $7 million for a family. It's $2 million for a family now, and we agree that imposes a tax on too many, as you say, middle class, normal size estates, and that's not the purpose of the estate tax.

LIN: All right, but where do we stand now, because I think in Bush's tax reform, over time the estate tax is being eliminated. So, where does your campaign go from here?

GATES: Well, you know, we have this curious thing now, where the tax under the present law, the tax goes out of existence at the end of 2010, and then it comes back into existence at the beginning of 2000 -- at the end of 2011. So it -- you know it's a curious anomaly that it results from Senate rules about long-term actions of the Senate. So, it's going to have to be changed. There's going to have to be some new legislative action because nobody feels that the current situation with this one-year high hiatus makes any sense at all.

LIN: How does your son feel about this?

GATES: He agrees with me. He agrees with me completely.

LIN: All right, because you've got a couple of grandkids with him, so I was wondering how much you wanted to pass on to them.

GATES: I think it'll be limited.

LIN: Limited.

GATES: Limited.

LIN: All right, who's going to break the news? They're probably not old enough to understand...

GATES: I think that when they grow up they'll be able to read it in the paper themselves...

LIN: You bet.

GATES: People talk about it quite a lot...

LIN: All right, thank you very much Bill Gates, Sr. Good to see you. Thanks for joining us.

GATES: Thank you. My pleasure.

LIN: Interesting perspective.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com







Aired January 18, 2003 - 18:46   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL LIN, CNN ANCHOR: It might strike you as kind of odd that someone with ties to the richest man in the world would actually support the estate tax. That's what you have to pay when you inherit money. Bill Gates' father turned a number of heads when he came out in support of the controversial levy. Bill Gates, Sr. is the co- author of "Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortune." He joins us now from Seattle to talk about his surprising support for the estate tax.
Mr. Gates, good to see you.

BILL GATES SR., AUTHOR, "WEALTH AND OUR COMMONWEALTH": Nice to be here.

LIN: You've got to tell us -- I mean why is it that you would want whatever you would pass on to your heirs, not that he needs the money, but why would you want it taxed, because people have argued that the estate tax is double taxation. You're once again taxing money that has already been taxed and accumulated after a family has worked hard to get it.

GATES: Now this is an extremely fair tax. It seems to us that it's the most opportune time that there could be to have wealthy people in effect reimburse the society that has made possible the enormous pleasure and discretion that they had over the years as a result of having become wealthy. You know, people say they become wealthy because they're so smart or because they work so hard, but in fact, people don't become wealthy in places like West Africa. People become wealthy in society, it's like the United States, where there's order, where there are markets that work, where there's a whole array of provisions from our governments that make it possible.

And we just feel that it's a very fair tax. That you live your life as a wealthy person and at the end of your life, then you've been a substantial tax is in order.

LIN: All right...

(CROSSTALK)

GATES: And it may be better than giving it to the kids, as a matter of fact.

LIN: Well in your case I think your kid's doing pretty well.

GATES: I would say that's all right, and I -- he's not in my will.

LIN: Well, there you go. Well, let me ask you this, though. When you talk about you know returning back to society, isn't that what charity is for?

GATES: That -- yes, I guess it is what charity is for, but it's also what taxes are for.

LIN: I mean what does the estate tax pay for that people need so desperately?

GATES: What does it pay -- well, it's part of the American revenue stream. If it weren't there, it would have to be -- the money would have to be raised in somewhere else. And it's going to be a major producer of revenue...

LIN: Right...

GATES: ... over the next year with...

LIN: Right...

GATES: ... an enormous amount of personal wealth we have in this country today, it's just beginning to perform for the country the way it will.

LIN: That's right and the baby boomers stand to inherit some $10 billions, I read somewhere. But in the meantime, you know, when we talk about wealthy, it's one thing to have the wealth of a Bill Gates, but it's another thing when, you know, a middle class family can mass $1 million pretty easily, especially when you live in a high-cost state like California or New York, where you might have real estate as part of your estate, your home value increases so much. So really, where is the cutoff? I mean if a middle class family is trying to pass on $1 million worth of assets, just like a house, a couple of cars, some jewelry, stock, it's a pretty easy thing to do now, and the estate tax takes up to 60 percent of that. Is that really fair?

GATES: Well, I don't know where you got the 60 percent. That's not true. The rate today is 49 percent, but it is -- in our view it is correct that $1-million amount, which is the amount below, which there is no tax to be paid, it should be increased. The current law will, as the next few years roll along, increase that exemption up to about -- well never mind the about. You know, increase it up to $3 1/2 million per person, which would be $7 million for a family. It's $2 million for a family now, and we agree that imposes a tax on too many, as you say, middle class, normal size estates, and that's not the purpose of the estate tax.

LIN: All right, but where do we stand now, because I think in Bush's tax reform, over time the estate tax is being eliminated. So, where does your campaign go from here?

GATES: Well, you know, we have this curious thing now, where the tax under the present law, the tax goes out of existence at the end of 2010, and then it comes back into existence at the beginning of 2000 -- at the end of 2011. So it -- you know it's a curious anomaly that it results from Senate rules about long-term actions of the Senate. So, it's going to have to be changed. There's going to have to be some new legislative action because nobody feels that the current situation with this one-year high hiatus makes any sense at all.

LIN: How does your son feel about this?

GATES: He agrees with me. He agrees with me completely.

LIN: All right, because you've got a couple of grandkids with him, so I was wondering how much you wanted to pass on to them.

GATES: I think it'll be limited.

LIN: Limited.

GATES: Limited.

LIN: All right, who's going to break the news? They're probably not old enough to understand...

GATES: I think that when they grow up they'll be able to read it in the paper themselves...

LIN: You bet.

GATES: People talk about it quite a lot...

LIN: All right, thank you very much Bill Gates, Sr. Good to see you. Thanks for joining us.

GATES: Thank you. My pleasure.

LIN: Interesting perspective.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com