Twenty percent of Delta Air Lines airfares will be priced by AI by the end of the year, working to figure out how much each individual customer is willing to pay them.
In the fall, Delta Air Lines revealed that they were using artificial intelligence to price about 1% of their inventory, trying to figure out the most each passenger would be willing to pay at the time they search for fares. They use Israeli company Fetcherr for this.
Delta’s President Glen Hauenstein explained at their Investor Day,
We will have a price available on that airplane at that time that’s available to you the individual…what we have today with AI is a super analyst, an analyst working 24/7 a day, trying to simulate..real-time what should the price points be? ..We’re letting the machine go ahead and price in a very controlled environment. It’s going to be a multi-year, multi-step process.
They see this as “a full re-engineering of how we price, and how we will be pricing in the future” – working to “get inside the mind of our consumer and present them something that is relevant to them, at the right time, at the right price.” And they expected the pilot to last 18-24 months.
Already though things are ramping up. We’re now seven months later, and during Delta’s second quarter earnings call on Thursday Hauenstein said they’re “about 3% of domestic” – so, a tripling – but the real shocker was that their “goal is to have about 20% by the end of the year” though they still consider themselves in “testing phase.”
I mean, we we can report back on what the actual numbers are, but you have to train these models as you might and and you have to give it multiple opportunities to provide different results. So we’re in heavy testing phase. We like what we see. We like it a lot, and we’re continuing to roll it out.
But we’re going to take our time and make sure that the rollout is successful as opposed to trying to rush it and risk that there are unwanted answers in there. So this this the more data it has and the more cases we give it, the more it learns, and we’re really excited about it, and we’re really excited about partnering with Fetcherr.
We haven’t heard as much about AI pricing from other airlines, but we certainly will. To the extent that Delta is successful, we’ll certainly be seeing other airlines match. For years airlines have talked about personalized pricing, but often in terms of giving discounts to specific customers that wouldn’t be available if you were shopping outside of their own website, or shopping as a guest. But this takes that to the next level.
While you might expect to be able to defeat this by searching outside of Delta’s channels, in the future I’d expect to see loyalty benefits tied to submitting to this sort of regime. Price segmentation only works if you can segment people. Airlines charge business travelers more than leisure travelers based on the kind of trip they’re buying, and now even whether there’s more than one person on the itinerary. They’re not going to so easily allow consumers to opt out of AI pricing if it’s important to their bottom-line.
DL is going to find a tremendous amount of backlash unless they can command the narrative. The pitch should be:
We (DL) offer full-fare prices in various classes, and, like others, we regularly offer discounts on those fares. We will use AI to help with this very complicated pricing system. This will permit us to offer significant discounts to the most price-sensitive customers.
Coke was developing a machine that, using ambient temperature, would dynamically price the product: lower prices when cooler out, higher when hotter. Consumers saw this as “regular price” plus mark up when hot. Coke should have sold it as “regular price” minus discounts when cold. This framing issue is important. And, of course, there’s no guarantee Coke could sell their framing. I believe the CEO lost his job over this.
And in case there are any wise-guys who wanna pretend like they don’t understand inflation or the relative value of money over time:
$200,000 in 1944 is equivalent in purchasing power to about $3,653,000 today. Anyone here earning over $3.5 million per year in ‘income’? Yeah, well, back then, any dollars earned above that woulda been taxed near 90%. I get it, taxes, inflation, money concepts are ‘hard’ to understand for some. Even harder for some: equity (fairness).
I have yet been able to figure out how DL can do this to me. Living near a non-hub, non-focus-city airport, I have a wide choice of the Big3 on every flight. I use Expedia or Google flights to see the options and prices, and then book directly. If those sites show $500 for a trip, how will DL charge me more when I go to their site? And, of course, if they try, I go to AA or UA. Or, though I prefer not to do so, I could book DL through Expedia.
Yes, Ticketmaster can manipulate my prices because they have a monopoly on sales to that concert. How can DL expect me to pay more than their competitors charge?
Finally, how would DL deal with the dozens of stories of “I logged in as a guest (or my parents, etc.) and received a $900 quote, while seeing a $1,000 quote for the same itinerary/dates/time using my account.”
For those of you who understand inflation and don’t like cherry picking, I share the following. The 1963 rate was 91% of earning over $300,000 ($3,151,618 today’s dollars) and was 52% for earnings over $24,000 ($252,129). In 1981, you paid 70% at $161,300 ($570,432) and 52% at $24,000 ($252,129). So, a one time, before we woke up, we somehow thought if you made the equivalent of a quarter million a year, the feds should take more than half of every addition dollar you make. Both of these dates were the last year before the extremely smart Kennedy tax cuts, and the equally wise Reagan cuts, respectively.
Sorry, I forgot to add that I used Head of Household rates. If I used Single rate, the taxes would have been more draconian. Married Filed Jointly would be less draconian. The 70% rate in 1981 was at $108,300 ($383,000) for Single taxpayers.
Of course, we should all have seen this AI “dynamic pricing” coming, and soon it will be everywhere. Just wait until Amazon gets ahold of it. anywhere that AI can know who you are, your income level, personal habits, history and preferences, everything down to microscopic detail, disgrace every last penny out of you.
@This comes to mind — By ‘woke up’ and referring to the 1980s, with the Reagan tax cuts, that really was the ‘beginning of the end’ of the ‘American Dream’ as wealth inequality began on its meteoric rise. Now, I understand, many of the right-wingers love him, Bush tax cuts, and #45/47, but this is ultimately not helping the country or its people as a whole. Great for the top, though. Whether you prefer Mel Brooks or Tom Petty: “It’s good to be (the) king!”
The top federal tax rate is 37% and the top California tax rate is 13.3% so taxes are still quite significant. The truly rich generally do not make their money on wages. They make their money on stocks or other forms of company ownership.
@jns — Sometimes you pay more, you get more (not always). You’d think NYC would have the highest, but it only has a combined top marginal income tax rate of approximately 14.776% (10.9% state and 3.876% local). Supposedly, Bridgeport, CT, has a total tax burden of up to 22% for its highest earners (in addition to Federal). Even Philly has 20.9%. Yikes.
By contrast, many ‘red’ states do not have income taxes; yet, their property taxes (and insurance premiums), like in Florida or Texas, can outweigh things. It’s inherently complex, nuanced, and there is no ‘right’ answer, but it’s good to consider options. At least for now, if you don’t like it where you are, you can move between states and cities.
Delta said:
“…get inside the mind of our consumer and present them something that is relevant to them, at the right time, at the right price.”
A little late to the game they are since Matrix and, to a lesser extent, its little brother Google Flights already does this.
Incredibly easy to mostly find exactly what I’m looking for with Matrix, which is usually a direct flight to DFW, LAX, SFO, or SEA and from there an international carrier out of the overpriced U.S., pools in which, given my home airport, Delta doesn’t even play.
I can see this approach potentially opening a can of worms for Delta. If you price by the individual, someone, likely the government or advocacy groups, will want to see the average price breakdown by protected class status of customer (race, gender, advanced age, etc). Even if there is no intentional bias, only disproportionate impact need be demonstrated to create the presumption of discrimination.
@Andy says:
“Just wait until Amazon gets ahold of it. anywhere that AI can know who you are, your income level,…”
Based on what I’ve seen, I expect that Amazon already has it; AMZN seems to have very little pricing discipline and extreme price volatility and, speaking as one who’s been a heavy AMZN shopper since it started, that has made it an unpleasant place to shop, so I’ve been drawn away to other retailers that can control their pricing and their inventory.
AI will never know one’s income since tax records, financial records from places like banks and brokerages, and employment records will likely never be available to AI developers. The best AI will ever be able to do is to make an educated guess based on aggregated Census Bureau income levels by residence zip code and zip+4 and that ain’t a bad thing. In my case, both my net worth and income are significantly above the average for my zip+4, so if AI wants to give me pricing based on the average income in my zip+4, I’ll take that every day of the week and twice on Sundays.
Everyone is overthinking this. When I read the headline, my first thought was, yay, I’m gonna fly First Class more because Delta will figure out how much I’m willing to pay for it. And say good-bye to free upgrades.
It’s not a guarantee that prices will rise.
@LAX Tom — But, but… ‘line go up!’ /s
@1990 – Okay, lots of rage here, not a lot of reason. So let’s walk through this with the facts, because facts don’t care about your feelings (or your snark).
You claimed that my 74% figure is dishonest because no one pays more than a 37% tax rate. But that’s a basic misunderstanding of how tax burden works. I’m not saying the rich pay a 74% rate — I’m saying the top 10% of earners pay 74% of all federal income tax revenue. That’s not a trick. That’s not misleading. That’s straight from the IRS. The top 1% earned around 22% of adjusted gross income but paid over 42% of all income taxes. The bottom 50% of earners? Again, they paid just 2.3%. That’s not a flat system, and it’s not regressive. That’s a highly progressive tax structure by any serious definition.
As for your nostalgic nod to the 1950s and the 94% top marginal tax rate: yes, that rate existed on paper, but it was mostly performative. The actual effective tax rate for top earners in that era was closer to 42%. Why? Because the tax code was riddled with shelters, deductions, and loopholes such as oil depletion allowances, income-splitting, and you name it. In fact, in 1952, fewer than 10 Americans actually paid the full 94%. That rate was political theater, not economic reality. And let’s be clear: the U.S. economic dominance of the 1950s was not a result of high tax rates. It was a result of being the only major industrial economy that hadn’t been reduced to rubble in World War II.
You then suggest that billionaires are “practically evading” taxes through loopholes, offshoring, stock-backed loans, and charity gamesmanship. Yes, there are problems in the tax code. And I fully support closing legitimate loopholes. But again, this is not an argument against capitalism or against the wealthy per se; it’s an argument for better tax enforcement and reform. As for borrowing against stocks, yes, some wealthy individuals do that, but it’s still debt, and they still pay capital gains tax when the assets are eventually sold. And taxing unrealized gains, which you imply we should do, would be economically reckless and legally dubious. Should we also start taxing homeowners based on Zillow estimates before they sell? Or retirees based on how well their 401(k) is doing this week?
Your argument that we’re living in a second Gilded Age and need a new Progressive Era misses the real problem. Wealth inequality isn’t driven by capitalism, it’s driven by poor public policy. Blue cities artificially restrict housing supply, unions block school reform, and our welfare system often punishes people for working more. Those are structural problems created by government and not by Jeff Bezos.
And finally, the “bootlicker” insult is just lazy rhetoric. It’s what people say when they’ve lost the argument. No one is defending every action of the wealthy or saying billionaires are saints. But you don’t fix inequality by scapegoating success or burning down the system that created the most innovation, prosperity, and opportunity in human history. You don’t help the poor by punishing the productive. You grow the economy. You expand the pie. You raise the floor, not by lowering the ceiling, but by letting people climb.
So next time, if you want to have an actual debate, come with numbers and logic — not envy and talking points. Facts are still waiting for you.
well said Mike Hunt
and, as I have said on these same topic elsewhere, it is very possible that DL will use AI to drive INCREMENTAL purchases as much if not more than trying to increase spend on already planned purchases.
We don’t know but, as an airline, DL is much more upfront but AI will be widespread in consumer pricing in a few years.
@Mike Hunt I presume, perhaps, that you did not see my earlier comment. When the wealthy borrow against their stock they can evade EVER paying capital gains tax. Upon their death their children get a “step-up in basis” which removes the accrued capital gains tax obligation. If the wealthy are smart they can avoid paying much tax in perpetuity.
@Mike Hunt — As always, thanks for engaging on here; it shows that you do care.
So, it seems we actually agree on something: Close the loopholes. However, this administration has reduced funding for the IRS, laying off the agents who actually enforce the existing tax code. Seems like they aren’t serious about enforcing the law (or reducing the debt.)
On public policy, without sufficient regulation, wealth tends to concentrate through regulatory capture and/or outright monopolization. Consumers and workers suffer.
Finally, the goal isn’t to ‘punish the productive’ but to ensure a fairer distribution of economic gains and opportunities, through equitable taxation and actual enforcement of reasonable regulations, not just ‘growth’ at all costs, because that just tends to benefit the top.
@Tim Dunn — Cheers to Delta’s attempts at transparency…
MK makes some good points, but seems unaware of who runs the government. See carried interest taxation if you had any doubts. The golden rule.
There is no better means for allocating scarce resources than the free market pricing mechanism, but capitalism also requires prudent regulation. Corporations will always seek to minimize costs such as externalities that are real costs on society.
@ Steven – Okay, so you’re describing what’s known as “buy, borrow, die,” and yes, it’s a real strategy. But let’s slow down, because your framing makes it sound like it’s some kind of evil cheat code rather than a legal, rational consequence of how our tax system is designed.
First, yes, wealthy individuals can borrow against their stock rather than selling it. Why? Because borrowing isn’t income. You don’t pay taxes on debt. No one does. If I take out a mortgage or a HELOC on my house, I don’t suddenly owe income tax. That’s not a loophole. That’s basic tax law. Loans have to be repaid, often with interest, and they carry risk. This isn’t a magical escape hatch. It’s just smart financial strategy that anyone with assets could theoretically use.
Now let’s talk about the “step-up in basis.” When someone dies, the tax code resets the cost basis of their assets to the market value at the time of death. You call this “removing the obligation,” but here’s the thing: it’s not some sketchy billionaire carve-out. It’s how the law has worked for decades for everyone who owns capital assets, including small business owners and middle-class retirees. If you want to eliminate that rule, go ahead, but be prepared to destroy family farms, small businesses, and anyone who inherits long-held property. Just know that you’re not only hitting billionaires. You’re hitting regular people too.
And while you’re worked up about wealthy people avoiding capital gains tax through death, you conveniently ignore the estate tax, also known as the death tax. That already applies at 40 percent federally for large estates, in addition to any state-level estate taxes. So no, they’re not exactly getting off “tax-free.”
If you want to eliminate the step-up in basis, fine. But you better be prepared to explain to the American middle class why they now owe capital gains tax on grandma’s 1970s house that appreciated for 50 years. That change won’t just impact billionaires. It will hit everyone. This isn’t Robin Hood. It’s just economically reckless policy that misunderstands how wealth is passed down.
And finally, let’s not pretend this is the reason for all economic inequality. The real issue is not that rich people sometimes delay paying capital gains. The real issue is that government policy often blocks mobility and opportunity for everyone else. You want more fairness? Fine. Reform the tax code. But don’t sell the myth that “perpetual tax evasion” is the root of all evil. It isn’t. It’s a symptom of a flawed system, and one that everyone benefits from at some level — including when folks deduct mortgage interest or write off your home office.
Instead of class warfare, we should be having a serious conversation about tax reform grounded in economic reality.
@Mike Hunt I addressed the estate tax issue as well. The US has a super generous estate tax exemption. Even a $10 million estate is not subject to tax. These aren’t small farms (despite the dishonest framing of many politicians). Grandma’s house may have appreciated to $2 million, but that is still far below the taxable limit. Once you factor in citizenship by investment and strategic renunciation (as I laid out in my hypothetical example) a wealthy family can avoid almost any tax for generations. I would be fine with a step-up in basis if the children were prohibited from renouncing citizenship and bringing all of the inherted assets with them to avoid ever paying tax and if borrowing against assets was treated as a taxable event (since the person borrowing gets value from being able to use the asset as collateral).
@Mike Hunt — Calling it the ‘death tax’ is W. Bush-era-level doublespeak.
Besides the reverse-Robinhood that just passed (BBB) raised the estate tax further (federal estate and lifetime gift tax exemption to $15 million per individual, or $30 million for a married couple, for gifts made after December 31, 2025. This exemption is indexed for inflation annually starting after 2026.)
C’mon, man. Do you have a spare $15 million lying around to gift? Get real. (Respectfully…)
@Steven – Sorry I missed that part. Yes, the U.S. currently has a high estate tax exemption. As of 2025, it’s about $13.6 million per individual or $27.2 million per couple. That means the vast majority of estates (over 99 percent) are not subject to the estate tax. That part is true.
The reason for that high exemption is to prevent the liquidation of family businesses, farms, and long-held properties just to pay the IRS. When you pass down illiquid assets, it’s not like heirs are sitting on mountains of cash. You don’t want a system where heirs have to sell productive land or a multi-generational business just because of a paper gain that triggers a massive tax bill.
You mention “citizenship by investment” and “strategic renunciation” as if it’s some easy, plug-and-play tax evasion scheme. It’s not. Renouncing U.S. citizenship is a complex, costly process that triggers an exit tax under IRC Section 877A. If your worldwide assets exceed about $2 million, or your average income over five years exceeds a set threshold, you pay capital gains tax on your assets as if they were sold the day you leave. That means no, you can’t just walk away with your billions untaxed. You are taxed at the door on the way out.
And as for borrowing against appreciated assets and treating that as a taxable event? That’s not how income works. The mere fact that you get value from an asset does not make it income. If that were true, you’d be taxed for getting a mortgage, for leasing a car, or for taking out a student loan. Borrowing is debt. It has to be repaid. It is not income, and if you tried to redefine it as such, you’d blow up the entire credit market. You’d cripple entrepreneurship, homeownership, and capital investment. You’re trying to tax liquidity itself, not wealth — and that would be devastating for anyone who isn’t already rich enough to avoid needing credit.
Should we look at things like GRATs, IDGTs, and aggressive valuation discounts in estate planning? Absolutely. But what you’re proposing is to rewrite the fundamental definition of income, radically expand the government’s power to tax unrealized or indirect value, and punish people for having assets they haven’t even sold. That’s not fairness. That’s confiscation by another name.
If you really want to go after generational inequality, then focus on education, housing supply, and labor mobility. Those are the policies that actually move the needle. Confiscating more wealth at death might make some people feel morally superior, but it won’t solve the structural issues that keep people from building wealth in the first place.
@Mike Hunt — Your ‘team’ is doing the opposite of what you suggest. Education, housing supply, and labor? Psh, they’re trying to abolish the Dept. of Education, defunding schools and research programs. As for housing, I wish the ‘Developer in Chief’ would actually do that through HUD, but he hasn’t; besides, it’s more state and local laws and governments that need to do their part. Last, you know your folks loathe workers, sabotage any attempts at organizing, and want nothing more than to bring back some form of indentured servitude. You talk big and can push out paragraphs of talking points, but you’re being disingenuous here. We’re about to be on a Mr. Toad’s Wild Ride in this economy for the foreseeable future, thanks to your people. Not ‘great.’ Big messes to clean up after all this.
If everyone pays based on how much money they have, then there’s no reason to ever try to earn more money.
@1990 – Yes, the Trump administration has made some serious economic mistakes. The tariff war, particularly with China is economically illiterate. Tariffs are just taxes on American consumers disguised as nationalism. You don’t beat China by raising prices on your own people. And yes, pressuring the Federal Reserve to keep interest rates artificially low (particularly when the economy was already growing) was a dangerous move. It helped inflate asset bubbles and set us up for a mess when inflation finally exploded post-COVID. That is not fiscal conservatism. That is populist short-termism, and it deserves criticism.
Now, let’s deal with the rest of your claim, because it’s mostly nonsense. First, the Department of Education is not the holy grail of student achievement. Most education policy happens at the state and local level. The DOE consumes billions, produces mountains of bureaucracy, and has little to no measurable impact on student outcomes. Republicans who want to downsize or restructure it aren’t anti-education. They’re anti-waste. The idea that the only way to support education is to funnel more money through a bloated federal agency is peak bureaucratic thinking.
Second, on housing… yes, the federal government has a role through HUD, but you even admitted the key issue: zoning laws, NIMBYism, and regulatory strangulation all happen at the local level, especially in deep blue cities. You want more affordable housing? Great. Go yell at the San Francisco Board of Supervisors or the New York City Council. They’re the ones making it illegal to build a duplex in half their neighborhoods.
Third, the claim that “my side loathes workers” is just lazy slander. No, conservatives don’t support forced unionization. That doesn’t mean they hate workers. It means they believe in freedom of association and market incentives. You think dragging businesses into collective bargaining under threat of law automatically benefits the average worker? Tell that to the people who lost jobs when union demands priced them out of employment. Conservatives support workers by supporting growth: jobs, deregulation, energy independence, tax cuts for small businesses. That’s not indentured servitude. That’s letting people rise by effort and initiative instead of waiting for a government handout.
And if you want to talk about who’s actually creating economic instability right now, look no further than your own team’s obsession with deficit spending, regulatory overreach, and student loan amnesty. We printed trillions, froze the economy, and now pretend like the resulting inflation just happened by accident. Spoiler alert: it didn’t. It was policy. From both parties, yes, but accelerated by Democrats who think the solution to every problem is more spending, more control, and more dependence.
You’re right about one thing: there’s a mess to clean up. But the answer isn’t doubling down on central planning and union mandates. It’s unleashing productivity, empowering individuals, and fixing the underlying policy rot. It’s not just swapping in a new team to make the same mistakes with better slogans.
@Mike Hunt — I don’t think that you’re Fry from Futurama (“True, but someday I might be rich. And then people like me better watch their step!”) I get it, you mean well.
On tariffs, of course it’s a tax on consumers (in the US). Tariffs should be surgical, by Congressional approval, not a weapon of personal/political grievance by the President on a whim (see Brazil this week). TACO, much?
As to the Fed, I personally have enjoyed the reasonable rates (+3%). Yes, that makes hiring, investing, etc. more challenging, but it also rewards those who save; the decades of low to no interest were like taking medicine when you don’t need it.
As to the agencies, of course they aren’t ‘waste, fraud or abuse,’ and there were independent inspectors general already in-place for that. Hence why they didn’t ‘save’ much, other than to kill the programs altogether and lay off decent folks who knew what they were doing (civil servants).
Glad to see that you’re ‘Abundance’-pilled on housing, as are many in the center and left as well, NYC and elsewhere. Easier said then done of course, and need to be mindful of those affected, ecosystems, etc. There’s a good and a bad way to do things. It takes time, too.
Generally, I’d say we should be investing in our people, their social safety nets, infrastructure, and carefully targeted relief where most needed. Meanwhile, the current administration is just pocketing as much cash for their cronies as possible while ballooning the debt. Not good, bud.
@Mike Hunt The citizenship renunciation exit tax would not apply if the children of a wealthy person renounced soon after the death of a parent because of the step-up in basis. Let me summarize the hypothetical example again for clarity.
1. John Smith has a net worth of $10 million. To avoid any capital gains tax he uses the “buy, borrow, die” strategy.
2. While John is about to die his lone son Jim buys Antiguan citizenship.
3. John dies. Due to the estate tax exemption Jim owes $0 in tax.
4. Jim almost immediately renounces US citizenship after the funeral. Because of the step-up in basis he owes $0 in exit tax.
5. He accumulates assets with no capital gains tax.
6. Jim dies with a net worth of $100 milliion in Antigua.
7. Jim’s son Bob inherits the assets. Antigua has no estate tax, so he owes $0.
It is possible to tax collateralized assets without damaging market liquidity. The government could require that collateralization be treated as a capital gains sale for tax purposes. It could allow the bank extending the loan to pre-pay the tax and add the tax amount to the total loan balance to prevent the need for a large and sudden asset sale. It could also include an exemption amount (say $1 million) so that this does not apply to middle-class mortgages or car loans.
@The Yar: While your statement is ridiculous on its face, reducing the motivation to get even more money is part of the motivation for a true progressive tax system.
If you tax wages at 40 percent, but tax profits at 0 percent, how do people setting wages / optimizing labor behave?
If you tax making ANOTHER million dollars at 80 percent, but tax wages at 20 percent, how does that affect a capitalist’s motivation to keep vs share profits?
Getting people who already have billions to try a but less hard at keeping even more of their worker’s money is not a bad thing.
@Steven – While your hypothetical sounds neat on paper, it collapses under the weight of actual tax law and real-world consequences. You’re suggesting that a wealthy heir can inherit millions, renounce U.S. citizenship, and magically avoid any taxes, all thanks to the step-up in basis and clever timing. But that’s not how it works. Not legally, and not practically.
Yes, when someone dies, their heirs receive a step-up in basis, which wipes out unrealized capital gains for tax purposes. That’s true. But you’re ignoring the far more relevant piece of law here: the expatriation tax under IRC Section 877A. If the heir’s net worth exceeds $2 million (which it does in your own scenario) or if their average annual income tax liability for the past five years is above the statutory threshold (around $201,000 in 2024), or if they fail to certify five years of tax compliance, then they are a “covered expatriate.” That status triggers an exit tax on the heir’s entire worldwide assets, calculated as if everything were sold the day before expatriation. That’s not optional. It’s not waived by the step-up in basis. It applies even if the assets were just inherited, and any appreciation that occurs after inheritance is 100 percent taxable upon renunciation. So no, your “Jim” doesn’t just walk away from the IRS at the funeral. He walks straight into a taxable wall if he’s honest on his forms.
Now, can wealthy people set up sophisticated structures to mitigate this? Sure. Do some succeed in doing so? Yes, but it’s extremely complex, legally risky, and usually reserved for the ultra-wealthy with white-glove legal teams operating across multiple jurisdictions. Renouncing citizenship is not free either. It involves a detailed process, a fee, and an exit tax that does not go away just because someone times it cleverly. You also conveniently skip over the fact that the IRS has mechanisms like FATCA and PFIC rules to track offshore wealth and income. So while it’s theoretically possible to hide, it’s not easy, not cheap, and not safe.
Then we get to your idea of taxing borrowed assets, essentially treating loans as capital gains. That is a complete redefinition of income. Loans are not income. That’s not a loophole. That’s the basis of modern finance. If you tax the act of borrowing, you’re taxing liquidity, not profit. That means you’d be slamming homeowners for taking out mortgages, entrepreneurs for raising capital, and students for taking loans. Even if you claim you’ll exempt the middle class, you’re still fundamentally distorting how credit markets work. Banks would become tax collectors. Taxpayers would be paying on money they haven’t actually earned. And the result would be less borrowing, less investment, and slower economic growth across the board. It’s not smart policy. It’s ideological overreach dressed up as fairness.
So let’s recap. Your scenario depends on perfect timing, ignores how the expatriation tax actually works, and proposes a fix that would destabilize credit markets and hurt far more than just the ultra-wealthy. It’s clever in theory, but in practice it’s riddled with legal holes, economic distortion, and wishful thinking. Tax reform is a worthy discussion. But let’s have that conversation based on facts, not fantasy.
Don’t stop, fellas. The dialogue is healthy. We may never agree, but at least we’re discussing things.
@Mike Hunt — When I read your closing, I couldn’t help but think of: “Is this the real life? Is this just fantasy?”
I’ve been a mostly-loyal DL customer (where SW didn’t fly) since I started flying in the 60’s. That its computer is going to dissect it’s info on me (that it even has it is infuriating … yeah, I know computers know everything about everybody) and decide what I’m willing to pay to fly DL … is like a punch in the …! I don’t know what that number is, but it’s now far less than it was earlier today. And DL is crowing about their intentions to make it 100%!
AI will determine I will pay 12.5k miles for a domestic one-way.
@Mike Hunt. Darn fine posts on this. I enjoy the “billionaires can forever avoid paying taxes” refrain from the left. As you well know, the lower end of millionaires might do it. But we’re talking about 40% tax on the estate at about the $15 million level. And, while 40% is greater than any marginal rate, and well above the max lt cap fain rate, it is 40% of the entire about, basis and gain.
I will present an example. I invest $20 million in, say, BRK. It grows to $100 million at my death. I never paid a cent of tax on the gain. My estate will $34 million (40% of $100 minus $15). My heir(s) receive $66 million worth of BRK (the rest was sold to pay estate taxes) which will have a basis of $66 million. The capital gain taxes I avoided by dying is about $19 million ($80 million gain at 23.8%).
Here come discrimination class action lawsuits.
Because AI scans and learns from comments. The most I’m willing to pay for a Delta airline ticket.on any given day is $0. 01. I urge everyone to repost.
I mean Delta… You don’t need AI just ask the customer how much they are willing to pay.. I personally have a limit for each trip I take. For instance I can fly RT from the OC from Las Vegas for under $100 on Spirit. I only got over night and only need a small bag that’s free. Delta for the same trip wants substantially more. So $100 is my max for that trip. No need to pay for AI….
Doubt it will make much difference. Delta has always been the most expensive, both in dollars and miles, and I don’t think the underlying metrics will change. At least for me, living in the NYC metro area, I’ve got multiple other choices.
@mike hunt, you were so close to making a convincing argument and then you said rich people pay capital gains taxes on the stocks they borrow against, which is simply not the case. “Borrow, buy, die” is the relevant phrase that any high-net-worth advisor is intimately familiar with. You borrow against the stocks and then make bare minimum payments until you die at which point the portfolio steps up in basis and your heirs owe no capital gains taxes. Meanwhile, it was borrowed money which is not income, so you sit, fat and happy, in the lowest tax bracket while people who actually have to earn wages in order to eat pay through the nose.
Anyone who thinks the modern tax code isn’t rigged to favor the wealthy just hasn’t looked at the tax code.
Supply-side economics resulted (intentionally) in the biggest upward transfer of wealth in history. If, as you say, the old tax system was performative and rich people didn’t actually pay that top tax and therefore the modern tax environment is tougher on them, then why was it the rich people who were advocating for the changeover to the current tax system, and why do they continue to advocate for it? By your logic, they must like losing money.
Rich people should pay more than 75% of taxes because they get more than 75% of all benefits from our society. Just one example, taxes pay for ATC which rich people use to safely fly around in their private jets. I get no benefit from that, but my taxes support it far more than rich people’s. I pay a higher percentage of my income and net worth than they do, and on top of that, they just got gifted another tax deduction for buying the private jet in the first place.
Rich people are in charge of tax and monetary policy and if you don’t think they’re putting their thumbs on the scale for themselves, you’re simply not paying attention.
Here’s my 2¢: Everyone is debating whether the Delta AI project will be good or bad. No one is saying what is the underlying truth — Delta would not be doing this project if they weren’t going to somehow be making MORE money with it, not less. If they only discount tickets using it, then they lose money, and the project is over. Even if they discount *some* tickets, they will have to increase others; someone has to pay for the loss of revenue from discounting tickets, because the bottom line for DL is a profit.
The only way I see this helping us is if the AI model ensures that every seat is filled on the plane as much as possible; that way the money lost via discounting is made up by the revenue gained by the extra flyer(s).
But Delta flights are already full most of the time, and they have not in a long time discounted last-minute unfilled seats, reasoning that the last-minute traveler is a business traveler, and will buy the seat regardless of price, which is somewhat true I believe. So how does this benefit us?