United CEO Wants A Wealth Tax And Near-100% Inheritance Taxes—You Don’t Have To Be Rich To Lose

United Airlines CEO Scott Kirby told the New York Times that he wants a national wealth tax and inheritance taxes approaching 100%. He’s worried about inequality, the same week his airline further stratified customers by raising the cost of elite status by as much as 45.5%. United has been investing in better wines and caviar service for its more exclusive Polaris Studio business class seats. They sell distinctions between passengers, then sell additional distinctions within the premium cabin. And he told the Times, Wealth inequality has become a danger to our society, and we need to address that. We should have a national wealth tax — it won’t work by state because people will just move. And I think we should have inheritance taxes that get close to 100 percent at some level. I would pay them. Notably Kirby doesn’t argue for a higher corporate income tax or higher capital gains tax on his shareholders. Instead, a confiscatory inheritance tax creates a huge incentive to spend down on luxuries like this – since anything left at the end of life would get taken away, rather than being passed down to your children. United would profit! I’ve compared Kirby to Captain Renault in Casablanca before. Under Biden, United leaned into diversity programs and pronouns, climate commitments, affirmative action and vaccine mandates. Under Trump, Kirby became a defender of the President’s tariff strategy and intentions. Now, speaking to the Times, he’s offering wealth redistribution. As Renault offered to Germany’s Major Strasser, I have no conviction, if that’s what you mean. I blow with the wind, and the prevailing wind happens to be from Vichy. I don’t know Kirby’s private convictions. His public positioning certainly adapts. But I’ll try to take his concern seriously here. A Bigger Fortune Doesn’t Mean Everyone Else Gets Poorer Kirby treats wealth inequality itself as evidence of danger. I’d start by asking how the wealth was acquired, what happens to everyone else’s living standards, and whether people have opportunities to improve their lives. A founder can get enormously rich by creating something millions of people voluntarily buy. Customers get a product they value more than the price. Workers and suppliers get paid. The founder’s shares become valuable because of how well the business keeps serving customers. Wealth inequality can rise even as ordinary people become better off. A policy that destroyed the business could narrow inequality while making everyone worse off. Whatever you think of Elon Musk, he created online payments; the modern electric car industry; has actually created computer-assisted telepathy; delivered the world’s fastest internet in space; is sending people to Mars on rocket ships and is starting to build flying cars and a robot army to supplant the need for physical labor. At a certain level wealth is about allocating capital to its most productive uses. None of this means every fortune is deserved. Wealth obtained through subsidies and political favoritism is a different matter. So is using government to stop other people from competing. Of course, making government more powerful over private fortunes creates more opportunities to buy favors. Poverty, expensive housing, bad schools, and barriers to entrepreneurship can create inequality and should be addressed, but someone else’s paper wealth doesn’t on its own fix that. Kirby understands that a better airline can charge more because customers value what it offers. The same possibility of creating value exists throughout the economy. A Wealth Tax Can Take A Large Share Of Investment Returns Kirby hasn’t said how big a wealth tax he wants. California’s prop 40 is for a ‘one time’ 5% tax, which can easily exceed the full year’s return. An annual 2% tax on $100 million earning 5% would be a $2 million bill against $5 million of returns which is 40% of the return – before existing taxes which themselves can total over 50%. It’s still due in a year of losses, or when the wealth is entirely illiquid like an ownership stake in a company. And a stock portfolio represents ownership of businesses and claims on their future earnings. A wealth tax makes holding those claims less rewarding relative to spending the money. That means less saving, less financing for new investment, and a smaller future capital stock and therefore lower productivity and slower wage growth. The Constitution Makes This An Especially Convenient Promise I think a conventional national wealth tax, imposed at uniform rates without apportionment among the states, would be pretty clearly unconstitutional. That means Kirby can advocate for something without worrying that it’s going to happen. He can signal concern for inequality without doing anything about it. The Constitution requires direct taxes on property to be apportioned according to state population. A state with 5% of the population would owe 5% of the total, regardless of its share of taxable wealth. That requirement doesn’t fit the usual proposal to apply the same wealth tax rate nationwide. The Sixteenth Amendment allows income taxes without apportionment. It doesn’t exempt other federal taxes. The Supreme Court reaffirmed that property taxes require apportionment in Moore v. United States. Near-100% Inheritance Taxes Reward Spending The Money Suppose Kirby means a 99% marginal tax above an exemption. Someone already above that exemption can leave another $1 million to their children and deliver just $10,000. Or they can spend the million during life. That changes the relative price of providing for your family versus consuming more yourself. It also reduces the reward for additional work and investment once you’ve funded your own spending and the inheritance the government permits. Confiscatory inheritance taxation encourages people to draw down their wealth and spend as much on United Polaris as possible while they’re alive. People spend the money rather than leaving it to the government to take when they die. That means less savings, less investment, and higher interest rates. When pairing inheritance taxes with discussion around wealth inequality, the focus is often on ‘just deserts’ or the notion that ‘the children didn’t earn the money’. But that ignores the person making the gift. The friends you take to dinner didn’t earn their dinner. A charity doesn’t earn their donations. People can acquire a legitimate claim to something because its owner chooses to give it to them. Gifts and inheritances don’t need to reward the recipient’s merit to be legitimate – how the property was acquired and transferred matters. A bequest benefits the recipient and the person who wants to provide for them. The parent’s anticipation matters while they’re alive. People value knowing their children will be provided for. And saving has benefits beyond either party. Discouraging family provision can also reduce the cushion available for unexpected longevity and care costs. Someone spending down their corpus easily becomes reliant on Medicaid at the end of life. If you want to tax wealthy people, tax consumption rather than their gifts and bequests. Under a properly designed expenditure tax, savings can remain invested, and heirs pay when they draw money out to spend. At a debt to GDP ratio of around 125%, higher taxes in the future or government debt default are the only possibilities. At a minimum, those taxes should be designed in a way that doesn’t leave everyone worse off through higher interest rates, less investment, and reduced innovation. And it shouldn’t bias consumption towards United’s long haul business class. Topics on this page