The bill gates problem, p.49
The Bill Gates Problem, page 49
internalized a cost-benefit: There’s also a question of whether the Gates Foundation is too close to the IRS. A Gates Foundation attorney served on the IRS’s Advisory Committee on Tax Exempt and Government Entities between 2015 and 2018, which should have given the foundation an open forum to discuss its concerns and to brainstorm the “development of innovative and cooperative problem solving strategies”—the stated purpose of the advisory committee. During the time the foundation had a representative on this committee, the IRS finalized new rules that helped the Gates Foundation and other large philanthropies expand their financial engagements with the private sector through a program called Program-Related Investments.
The IRS, generally speaking, was not particularly helpful during my reporting. It would not agree to interviews, and it denied my FOIA seeking any complaints it had received about the Gates Foundation—on the grounds that such complaints were “confidential.” Federal Advisory Committee Database, Advisory Committee on Tax Exempt and Government Entities, Committee Detail, https://www.facadatabase.gov/FACA/apex/FACAPublicCommittee?id=a10t0000002ondOAAQ; “Steps to Catalyze Private Foundation Impact Investing,” The White House, April 21, 2016, https://obamawhitehouse.archives.gov/blog/2016/04/21/steps-catalyze-private-foundation-impact-investing.
investigation of corporate tax avoidance: Jennifer Liberto, “Offshore Tax Havens Saved Microsoft $7 Billion in Taxes—Senate Panel,” CNN Business, September 20, 2012, https://money.cnn.com/2012/09/20/technology/offshore-tax-havens/index.html; “Subcommittee Hearing to Examine Billions of Dollars in U.S. Tax Avoidance by Multinational Corporations,” Press Release, website of Senator Carl Levin, September 20, 2012, https://web.archive.org/web/20121212035753/http://www.levin.senate.gov/newsroom/press/release/subcommittee-hearing-to-examine-billions-of-dollars-in-us-tax-avoidance-by-multinational-corporations/.
Bill Gates called them “hogwash”: Bill Gates, Interview by Jeremy Paxman, BBC Newsnight, January 23, 2014, https://www.youtube.com/watch?v=baUmdtrZp90.
402 appeals on its property taxes: Schwab, “Bill Gates Gives to the Rich (Including Himself).”
slowly disburses the funds: Mark Curtis, “Gated Development: Is the Gates Foundation Always a Force for Good?” Global Justice Now, June 2016, https://www.globaljustice.org.uk/sites/default/files/files/resources/gjn_gates_report_june_2016_web_final_version_2.pdf.
target the accumulated fortunes: The Institute for Policy Studies has proposed a 2 percent wealth tax on the assets of large charitable foundations “that are closely controlled by donors.” That is, the Gates Foundation could be seen as part and parcel of Bill Gates’s personal wealth because he, effectively, controls how it is used, so there is an argument to be made that the foundation’s endowment should be subject to a wealth tax. Some economists have also said that a tightly controlled billionaire philanthropy like the Gates Foundation might be subject to a wealth tax. Collins and Flannery, “Gilded Giving 2022”; Emmanuel Saez and Gabriel Zucman, “Progressive Wealth Taxation,” BPEA Conference Drafts, September 5, 2019, https:// www.brookings.edu/wp-content/uploads/2019/09/Saez-Zucman_conference-draft.pdf.
chipping away at Gates’s assets: To explain the math: If Gates earns a 10 percent return on his investments of $100 billion this year, his wealth would increase by $10 billion, to a total of $110 billion. But if Congress levied a 3 percent wealth tax on his original $100 billion at the beginning of the year, he’d be working with only $97 billion. Under this scenario, his 10 percent investment return ($9.7 billion) would bring his net worth up to $106.7 billion. So, the 3 percent wealth tax would generate $3 billion in revenue for Treasury, but it would reduce Gates’s personal wealth by an even larger number, $3.3 billion—from $110 billion to $106.7 billion. Over the last twenty years, a consistently levied 3 percent wealth tax would have magnified these effects—generating $30 billion in tax revenue, but reducing Gates’s wealth by $60 billion. I did this calculation using Gates’s estimated yearly wealth according to the Forbes billionaires list.
I ran my calculations by University of California economist Gabriel Zucman, who pointed me to the website taxjusticenow.com, which models how different wealth tax proposals would have changed the personal wealth of the superrich—had the tax been in place as far back as 1982. According to these models, Senator Elizabeth Warren’s wealth tax would have reduced Bill Gates’s wealth, as it stood in 2020, from $117 billion to $21 billion. Bernie Sanders’s plan would have reduced it to $15 billion.
critique of Piketty’s book: Bill Gates, “Why Inequality Matters,” GatesNotes, October 13, 2014, https://www.gatesnotes.com/Books/Why-Inequality-Matters-Capital-in-21st-Century-Review.
“We want our children to make their own way”: The Gateses’ children enjoy ultra-wealthy lifestyles, and each will almost certainly inherit a large sum of money. It is preposterous to claim that they will have to “make their own way in the world.”
It was a private call: Aimee Picchi, “Thomas Piketty: Bill Gates Doesn’t Want to Pay More Tax,” CBS News, January 5, 2015, https://www.cbsnews.com/news/thomas-piketty-bill-gates-doesnt-want-to-pay-more-tax/.
“It isn’t always popular”: Bill Gates, “What I’m Thinking About This New Year’s Eve,” GatesNotes, December 30, 2019, https://www.gatesnotes.com/About-Bill-Gates/Year-in-Review-2019.
meaningful resources pursuing tax policy: The only record I could find of Gates putting money into tax reform was a $250,000 donation in 2006 to oppose a ballot initiative aimed at repealing Washington state’s estate tax.
We see a similar disconnect in Warren Buffett: The Obama White House at one point even proposed the so-called Buffett Rule, aimed at taxing the wealthy. The plan went nowhere, and even if it had, it’s not clear if or to what degree it would have increased taxes on Buffett’s wealth. The White House had emphasized that the Buffett Rule would tax the superrich in a manner that was “equitable, including not disadvantaging individuals who make large charitable contributions.” Office of the President, Fiscal Year 2013, Budget of the U.S. Government, Office of Management and Budget, 39, https://obamawhitehouse.archives.gov/sites/default/files/omb/budget/fy2013/assets/budget.pdf.
Janet L. Yellen said: “U.S. Treasury Blocks over $1 Billion in Suleiman Kerimov Trust,” U.S. Department of the Treasury, June 30, 2022, https://home.treasury.gov/news/press-releases/jy0841.
one-hundred-million-dollar yacht named Graceful: Mike McIntire and Michael Forsythe, “Putin Faces Sanctions, but His Assets Remain an Enigma,” New York Times, February 26, 2022, https://www.nytimes.com/2022/02/26/world/europe/putin-sanctions-money-assets.html?campaign_id=249&emc=edit_ruwb_20220406&instance_id=57801&nl=russia-ukraine-war-briefing®i_id=94181639&segment_id=87708&te=1&user_id=5affd5c339e726b5205a2a069c754d1b.
damning moniker: “Episode 138: Thought-Terminating Enemy Epithets (Part II),” Citations Needed, June 9, 2021; https://citationsneeded.medium.com/episode-138-thought-terminating-enemy-epithets-part-ii-dea4bfcda8c7.
“harder to trace the deals”: Anupretta Das and Craig Karmin, “This Man’s Job: Make Bill Gates Richer,” Wall Street Journal, September 19, 2014, https://www.wsj.com/articles/this-mans-job-make-bill-gates-richer-1411093811.
served time in prison for bank fraud: Craig Torres, “Convicted Felons Handle Gates Fortune,” Wall Street Journal, March 7, 1993, https://archive.seattletimes.com/archive/?date=19930307&slug=1689167.
uncovered this in the 1990s: Das, Flitter, and Kulish, “A Culture of Fear at the Firm That Manages Bill Gates’s Fortune.”
with the intense secrecy: At times, the secrecy surrounding Gates’s personal wealth borders on an alternate reality. Following Bill and Melinda’s divorce in 2021, the New York Post and other outlets reported that Bill had razed a mansion he recently bought in San Diego, a massively wasteful, climate-destructive decision that created a deeply annoying construction zone for neighbors and beachgoers. Though the article quotes neighbors saying they had personally seen Gates at the construction site where a new mansion was being built, and though the Wall Street Journal had previously reported on his purchase of the property, Bill Gates’s PR people told the New York Post that Gates did not, in fact, own it. So, how do we prove or disprove this? Property records in San Diego County don’t tell us who owns the house. They tell us what owns the house: a financial vehicle called “2808 of Trust,” in care of the Northern Trust Company in Seattle. Neither the county nor Northern Trust could say who the actual owner was. See Mary K. Jacob, “Bill Gates Turns $43M Mansion into ‘Bachelor Pad’ Nuisance,” New York Post, March 23, 2022, https://nypost.com/2022/03/23/bill-gates-is-turning-43m-mansion-into-bachelor-pad-nuisance; Katherine Clarke, “Bill and Melinda Gates Buy Oceanfront Home Near San Diego for $43 Million,” Wall Street Journal, April 21, 2020, https://www.wsj.com/articles/bill-and-melinda-gates-buy-oceanfront-home-near-san-diego-for-43-million-11587509127.
average federal tax rate of 18.4 percent: “America’s Top 15 Earners and What They Reveal About the U.S. Tax System,” ProPublica, April 13, 2022, https://www.propublica.org/article/americas-top-15-earners-and-what-they-reveal-about-the-us-tax-system. Note: ProPublica reported that on his average yearly income of $2.85 billion, Gates was able to deduct 22 percent of it from taxes—presumably due in part (or in whole) to his charitable giving. As ProPublica describes it, the IRS has “a generous provision of the tax code [that] allows [billionaires] to deduct the full value of the stock at its current price—without having to sell it and pay capital gains tax.” ProPublica would not share Bill Gates’s tax documents with me; see Paul Kiel, Ash Ngu, Jesse Eisinger, and Jeff Ernsthausen, “America’s Highest Earners and Their Taxes Revealed,” Pro- Publica, April 13, 2022, https://projects.propublica.org/americas-highest-incomes-and-taxes-revealed/.
“slightly reduce an ever-increasing U.S. debt”: Jesse Eisinger, Jeff Ernsthausen, and Paul Kiel, “The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax,” ProPublica, June 8, 2021, https://www.propublica.org/article/the-secret-irs-files-trove-of-never-before-seen-records-reveal-how-the-wealthiest-avoid-income-tax.
end the so-called death tax: David Cay Johnston, “Questions Raised on New Bush Plan to End Estate Tax,” New York Times, January 29, 2001, https://www.nytimes.com/2001/01/29/business/questions-raised-on-new-bush-plan-to-end-estate-tax.html.
“absolute choice”: “Bill Moyers Interviews Bill Gates, Sr. and Chuck Collins,” PBS NOW, January 17, 2003, https://billmoyers.com/content/toolbooths-digital-higway-bill-gates-sr-chuck-collins-inheritance-tax-scientist-devra-davis-killer-smog-jump started-clean-air-act/#inheritance-tax.
“marvelous system”: “Remembering Bill Gates Sr.,” Inequality.org (blog), https://inequality.org/great-divide/remembering-bill-gates-sr/.
a vast nanny state: Dean Baker, “The Conservative Nanny State,” Center for Economic and Policy Research, 2006, https://web.archive.org/web/20061002021111/http://www.conservativenannystate.org/cnswebbook.pdf.
CHAPTER 4: FAIL FAST
“take risky bets”: Mark Suzman, “2022 Gates Foundation Annual Letter: Board of Trustees, What’s Next,” Bill & Melinda Gates Foundation, n.d., https://www.gatesfoundation.org/ideas/articles/2022-gates-foundation-annual-letter-trustees.
$2 billion to private companies: “Strategic Investment FAQs,” Gates Strategic Investment Fund, n.d., https://sif.gatesfoundation.org/faq/.
pharma giants like GSK: Note: The foundation’s tax records show charitable grants to GlaxoSmithKline I+D, S.L., and GlaxoSmithKline Biologicals.
“global access agreements”: CureVac, Draft Registration Statement, Ex. 10.7, U.S. Securities and Exchange Commission, June 22, 2020. Note: As the foundation describes it, “Global Access requires that (a) the knowledge and information gained from a Programmatic Investment be promptly and broadly disseminated, and (b) the Funded Developments be made available and accessible at an affordable price to our intended beneficiaries. Within the Global Health and Global Development programs our beneficiaries are the people most in need living in developing countries and within U.S. Programs they include low income students, students of color and first-generation college students, and the educational systems serving these communities.” “Global Access Statement,” Bill & Melinda Gates Foundation, n.d., https://www.gatesfoundation.org/about/policies-and-resources/global-access-statement.
access agreements aren’t being enforced: “CureVac Collaboration,” Bill & Melinda Gates Foundation, n.d., https://www.gatesfoundation.org/ideas/media-center/press-releases/2015/03/curevac-collaboration.
CureVac’s board: Tim Schwab, “Is the Shine Starting to Come Off Bill Gates’s Halo?,” Nation, May 7, 2021, https://www.thenation.com/article/society/bill-gates-foundation-covid-vaccines/.
Why would the foundation release: Note: As it turns out, CureVac’s vaccine ended up being a bust, so we never got to see how the company’s access commitment to the Gates Foundation fully played out. From outward appearances, however, the company planned its business model around serving wealthy nations, not the global poor. This included an agreement to supply 405 million doses to the European Commission; Schwab, “Is the Shine Starting to Come Off Bill Gates’s Halo?”; Jon Cohen, “What Went Wrong with CureVac’s Highly Anticipated New MRNA Vaccine for COVID-19?,” Science, June 18, 2021, https://www.science.org/content/article/what-went-wrong-curevac-s-highly-anticipated-new-mrna-vaccine-covid-19.
relationship with other Covid-19 vaccine producers: David Bank and Dennis Price, “Linchpin of Gates Foundation’s Health Strategies, ‘Global Access Agreements’ Fail Their Covid-19 Test,” ImpactAlpha, June 10, 2021, https://impactalpha.com/the-linchpin-of-gates-foundations-health-strategies-global-access-agreements-fail-their-covid-19-test/; “BioNTech Announces New Collaboration to Develop HIV and Tuberculosis Programs,” Press Release, BioNTech, September 4, 2019, https://investors.biontech.de/news-releases/news-release-details/biontech-announces-new-collaboration-develop-hiv-and/.
Similar failures surfaced: Cepheid’s failure to deliver global access during the pandemic followed criticism around the company’s alleged profiteering from its TB diagnostic, which it boasts of having developed with Gates Foundation support. In 2017, a report sponsored by Unitaid, a global health agency, cited the “potentially monopolistic arrangement” in Cepheid’s dominant market position in tuberculosis diagnosis, which could affect prices. The foundation’s global access agreements, once again, did not appear to be making the corporate products it funded available to the poor at a fair, accessible price; Cepheid, Form 8-K, Ex. 99.01, U.S. Securities and Exchange Commission, 2006; David Lewis and Allison Martell, “Donors Bet on a US Firm to Fix Testing in Africa. Then Covid-19 Hit,” Reuters, March 1, 2021, https: //www.reuters.com/investigates/special-report/health-coronavirus-africa-cepheid/.
gone to Cepheid: Lewis and Martell, “Donors Bet on a US Firm to Fix Testing in Africa. Then Covid-19 Hit.”
Merck’s rotavirus vaccine: “Enteric and Diarrheal Diseases,” Gates Foundation Strategic Overview, November 2009, https://docs.gatesfoundation.org/Documents/enteric-and-diarrheal-diseases-strategy.pdf. Note: It’s unclear what these “investments” were or how significant a role the Gates Foundation played because there is no record of charitable grants to Merck for work on the rotavirus.
profiled this episode in detail: Robert Fortner, “Why you might think like Bill Gates about global health,” (blog), February 13, 2016, https://robertfortner.posthaven.com/why-you-might-think-like-bill-gates-about-global-health.
“miss out on this lifesaving vaccine”: Michaeleen Doucleff, “Merck Pulls Out of Agreement to Supply Life-Saving Vaccine to Millions of Kids,” Goats and Soda (blog), NPR, November 1, 2018, https://www.npr.org/sections/goatsandsoda/2018/11/01/655844287/merck-pulls-out-of-agreement-to-supply-life-saving-vaccine-to-millions-of-kids.
name-and-shame attack of Merck: NPR later published another big feature, again vilifying Merck, but this time also praising GSK for filling the rotavirus vaccine gap Merck had left. This kind of coverage feels like very lightly filtered public relations from Gates, slapping Merck on the wrist while richly rewarding GSK. Michaeleen Doucleff, “It Looked as Though Millions of Babies Would Miss Out on a Lifesaving Vaccine,” NPR, May 31, 2019, https://www.npr.org/sections/goatsandsoda/2019/05/31/726863111/it-looked-as-though-millions-of-babies-would-miss-out-on-a-lifesaving-vaccine.
“worldwide, non-exclusive, perpetual”: Grantees have the ability to negotiate or push back on the terms and conditions of the global access agreements, but it is impossible to know how often this happens or what form the negotiations take because Gates’s grant agreements are usually hidden from public view.
popular podcast and public radio program: Ira Glass, Alex Blumberg, and Laura Sydell, “When Patents Attack!” Episode 441, This American Life, NPR, July 22, 2011, https://www.thisamericanlife.org/441/transcript.
Writer Malcolm Gladwell: Malcolm Gladwell, “In the Air,” New Yorker, May 5, 2008, https://www.newyorker.com/magazine/2008/05/12/in-the-air.
names only eleven: “Spinouts,” Intellectual Ventures, n.d., https://www.intellectualventures.com/spinouts.
including TerraPower: Catherine Clifford, “Bill Gates-Backed Nuclear Demonstration Project in Wyoming Delayed Because Russia Was the Only Fuel Source,” CNBC, December 16, 2022, https://www.cnbc.com/2022/12/16/bill-gates-backed-nuclear-demonstration-delayed-by-at-least-2-years.html; Alan Boyle, “Echodyne Radar Venture Flies Higher with $135M Funding Round Led by Bill Gates and Baillie Gifford,” GeekWire, June 13, 2022, https://www.geekwire.com/2022/echo dyne-radar-venture-flies-higher-with-135m-funding-round-led-by-bill-gates-and -baillie-gifford/; Alan Boyle, “Bill Gates leads $84M Funding Round to Boost Kymeta Antenna Venture’s Push into New Markets,” GeekWire, March 15, 2022, https://www.geekwire.com/2022/bill-gates-leads-84m-funding-round-to-boost-kymeta-antenna-ventures-push-into-new-markets/; Paul La Monica, “Crowd-Safety Firm Backed by Bill Gates and Peyton Manning Makes Wall Street Debut,” CNN, July 19, 2021; Lisa Stiffler, “Intellectual Ventures Spinoff Modern Electron Raising Cash for Heat-to-Electricity tech,” GeekWire, December 27, 2021, https://www.geekwire.com/2021/intellectual-ventures-spinoff-modern-electron-raising-cash-for-heat-to-electricity-tech/; Alan Boyle, “With Backing from Bill Gates, Pivotal Commware Raises $50M for 5G products,” GeekWire, February 11, 2021; Devin Coldewey, “Gates-Backed Lumotive Upends Lidar Conventions Using Metamaterials,” TechCrunch, March 22, 2019, https://techcrunch.com/2019/03/22/gates-backed-lumotive-upends-lidar-conventions-using-metamaterials/.
