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The world’s second-richest man is taking shots at Rep.Alexandria Ocasio-Cortez’s income tax plan, saying it wouldn’t actually target the vast wealth of many of the nation’s richest people.Gates, who amassed a fortune by building Microsoft, noted that many very wealthy people’s earnings subject to income taxes make up a tiny fraction of their overall wealth – a ’rounding error of ordinary income’ as he put it.I believe US tax rates can be more progressive,’ he said.’Now, you finally have some politicians who are so extreme that I’d say, “No, that’s even beyond.”You start to create tax dodging and disincentives, and an incentive to have the income show up in other countries and things.’ ‘Certainly, the idea of government being more effective in terms of how it runs education or social programs, there’s a lot of opportunity for improvement there,’ Gates said in a podcast on The Verge website.’In terms of revenue collection, you wouldn’t want to just focus on the ordinary income rate, because people who are wealthy have a rounding error of ordinary income.’ He noted that hedge funders and other wealthy people are able to structure their finances in such a way that ordinary income is only a part of the picture.’They have income that just is the value of their stock, which if they don’t sell it, it doesn’t show up as income at all, or if it shows up, it shows over in the capital gains side,’ he said, Fox News reported.’So the ability of hedge fund people, various people — they aren’t paying that ordinary income rate,’ he noted.Gates, who along with his wife Melinda have become some of the world’s leading philanthropists, allowed that the tax code could be made ‘more progressive,’ but didn’t spell out exactly how.’We can be more progressive without really threatening income generation — what you have left to decide how to spread around,’ Gates said, noting the tradeoff that many economists point out.Ocasio-Cortez’s plan is just one of many emerging proposals to force the wealthy to pay more.Sen.Elizabeth Warren has proposed a ‘wealth tax’ that slaps a 2 per cent tax on households worth $50 or more, and 3 percent for those with a fortune worth $1 billion or more.Gates pointed to analysis of the rate that top earners pay.’The one thing that never gets much press — the IRS shows the statistics for the top 400 people of the highest income and the rate they pay.’Anyway, you should look at that.It’s about a 20 percent rate, so it has nothing to do with the 39.6marginal ordinary income rate.’ ‘If you focus on that, you’re missing the picture,’ he said.According to IRS statistics, the top 400 earners in 2014 paid a 23.13 per cent tax rate, earning $127 billion in total and paying $29.4billion in taxes, the libertarian think tank American Enterprise Institute reported.Ocasio-Cortez used an appearance on CBS ’60 Minutes’ to pitch her plan to tax double-digit millionaires at a 70 percent rate – taking care to note the amount below that threshold would be taxed at lower amounts.’But once you get to the tippie-tops, on your ten millionth dollar, sometimes you see tax rates as high as 60 percent or 70 percent,’ Ocasio-Cortez said.’That doesn’t mean all $10 million are taxed at an extremely high rate.But it means that as you climb up this ladder, you should be contributing more,’ she said.Bill and Melinda Gates referenced Ocasio-Cortez in their annual letter about their foundation.They noted record gains by female lawmakers and praised Ocasio-Cortez for ‘opening our government up’ on Social Media.