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American Focus > Blog > Economy > Gates, Giving, and Government – Econlib
Economy

Gates, Giving, and Government – Econlib

Last updated: June 18, 2025 9:45 am
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Gates, Giving, and Government – Econlib
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For years, Bill Gates has been a prominent figure in philanthropy through the Gates Foundation. Recently, he made headlines by announcing an end date for this significant initiative. As Gates articulated in his latest statement:

I will give away virtually all my wealth through the Gates Foundation over the next 20 years to the cause of saving and improving lives around the world. And on December 31, 2045, the foundation will close its doors permanently.

Over the past 25 years, Gates has directed an impressive $100 billion into various charitable projects, funded not only by his wealth but also bolstered by contributions from fellow billionaires like Warren Buffett. Now, as the clock ticks down to the foundation’s closure, Gates aims to ramp up his contributions, forecasting an additional $200 billion will be donated in the next two decades, with Gates committing to relinquishing nearly all his wealth in the process.

The impact of the Gates Foundation is undeniable—estimates suggest that millions of lives have been improved or saved through its initiatives. Yet, the philanthropy of billionaires like Gates often faces scrutiny for perceived inadequacies in tax contributions. Herein lies the crux of the argument: opportunity cost is a concept often overlooked (or conveniently ignored). Rather than directing $200 billion through the Gates Foundation over the next 25 years, that same amount could be collected as tax revenue by the federal government without necessitating any changes to the tax code. Indeed, wealthy individuals can voluntarily pay more taxes whenever they choose; they just don’t. The optics are certainly curious. When someone ardently proclaims a moral obligation to do X while having the means and opportunity to do it—but consistently refrains—one might question the sincerity of their convictions.

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In his book Following Their Leaders: Political Preferences and Public Policy, Randall Holcombe differentiates between expressive preferences and instrumental preferences. Expressive preferences reveal what ideas we wish to convey, while instrumental preferences focus on the outcomes we desire when given a choice. Interestingly, what we express doesn’t always align with what we truly want. Holcombe posits that voting and political activism are often more about expressing preferences than achieving specific outcomes. As he notes, voters may express preferences that diverge from the actual outcomes they would prefer if they had the agency to make those choices.

This raises a provocative question: Picture a staunch advocate for increasing taxes on billionaires—ideally one who argues that “billionaires should not exist.” Now, imagine presenting this individual with a magical button that would implant in Bill Gates the desire to dissolve his foundation immediately and transfer his entire wealth of approximately $116 billion to the federal government as a voluntary tax. To put this into perspective, the Congressional Budget Office reports that the federal government spent $640 billion in January 2025 alone—more than five times Gates’ entire fortune in just one month! However, this comes at a steep price: the complete loss of the cumulative good that the Gates Foundation could have achieved over the next two decades.

If we placed this hypothetical button in front of our “billionaires shouldn’t exist” advocate and offered them the choice—to eliminate Gates’ billionaire status and generate an additional $116 billion in tax revenue for the government at the cost of erasing all future initiatives of the Gates Foundation—would they press it? Would their expressive preference for eliminating billionaires and increasing tax revenue align with their instrumental preference? Or, when faced with the moral weight of this decision—knowing they would obliterate the foundation’s potential good—would they pause and reconsider the authenticity of their expressed beliefs?

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So, would you press the button?

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