First, many countries now tax human workers more heavily than their potential AI competitors in the labor market. In the case of the US, roughly 85% of federal revenue comes from taxing people and their work (through income and payroll taxes), while capital and corporate profits are taxed far less. Technologies like AI benefit from favorable treatment in the form of generous write-offs, low corporate rates, and carve-outs.
Second, economists expect AI to increase the financial returns to capital relative to labor, even if it doesn’t cause unemployment. The most extreme version of this would entail AI agents that can design, replicate, and manage themselves – meaning that capital would be performing its own labor. Under current tax policies, such a shift would widen inequality and shrink government revenue as a share of GDP.
An AI tax could help level the field between humans and machines. Earlier this year, Anthropic CEO Dario Amodei warned that AI might eliminate half of all entry-level white-collar jobs and push unemployment to 10-20% within five years. Whether such forecasts are borne out may depend partly on policy. Taxing labor more heavily than capital tilts the scales toward automation that replaces, rather than augments, human workers. At the very least, we shouldn’t let our tax system help put people out of work.
Moreover, at a time when the fiscal outlook is darkening, an AI tax could protect public revenues from technology-induced shocks. If mass job losses or hiring slowdowns do occur, governments that rely on income and payroll taxes could face fiscal crises even if new AI-ready jobs emerge later.