Sheila Bair: In the age of AI, the US must rethink the taxation of labour and capital

March 31, 2026

Written by: Sheila Bair

As the population ages and technology disrupts the economy, young workers are carrying a disproportionate tax burden.

In her Financial Times article, Sheila Bair argues that the U.S. tax system unfairly favors wealthy investors over wage-earning workers, creating a growing imbalance that is likely to worsen with the rise of AI. She explains that investment income—such as capital gains—is taxed at significantly lower rates than wages and is often not taxed at all if assets are held until death due to the “step-up in basis.” As a result, a large share of tax benefits flows to the top 1% of earners, while younger workers shoulder a disproportionate burden.

Bair challenges the common justification that lower capital gains taxes drive economic growth, noting little evidence to support this claim and highlighting how these policies can distort economic behavior. She also points out that wealthy investors avoid additional taxes, such as Social Security contributions, further increasing inequality.

To address this imbalance, Bair advocates for eliminating preferential tax treatment on investment income, including ending the step-up in basis and taxing gains at death. She argues that such reforms could generate significant revenue, improve tax fairness, and help stabilize programs like Social Security—especially as demographic shifts and AI reduce the number of wage earners. Ultimately, she frames tax reform as a nonpartisan issue essential to ensuring a more equitable system for future generations.

Visit The Financial Times to read the full article by WWSG exclusive speaker, Sheila Bair.

A globally recognized authority on financial regulation and economic policy, Sheila Bair led the FDIC through the 2008 financial crisis and has since continued to shape the future of finance through leadership roles in government, academia, and the private sector. Named to Time’s “Top 100” and Forbes’ “Most Powerful Women” lists, she is a trusted voice on stability, reform, and consumer protection in the global economy. To bring Sheila Bair’s insight and leadership to your next event, contact WWSG.

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