If AI replaces workers, should it also pay taxes?

The fact that capital owners successfully avoid contributing to the financing of our states and social systems is, in my view, one of the fundamental problems of our time.

I really have difficulties seeing AI as anything else than yet another type of machinery. If your argument is "but it's replacing ALMOST ALL human labour" - well, the same argument was valid for tractors a hundred years ago (when almost everyone was employed in agriculture).

No matter how you try to resolve this economically, it should hold that if something can be produced with minimal human labor, it shouldn't require substantial human labor to buy (in "reasonable" quantities, however you want to define and enforce that).

Without understanding the "end game" of automation (decades+ from now) it feels like we're just sleepwalking into an absurd reality where a few trillionaires own the world's fully automated food supply chain, but buying food somehow requires just as much labor as it does today.

Automation has been shoving blue collars out of the job market for a century.

A single farmer can do with his machinery today what took a dozen of people just 50 years ago.

Manufacturing has been super automated long ago.

Even in commerce automated checkout has been replacing workers for more than a decade.

In any case such a tax is not only pointless but actively dangerous, as all it achieves is making countries without such a tax more competitive.

(Otherwise you would buy a robot.. tax deduct it, then pay less tax by not paying wages, which basically means humans would be paying tax to offset the cost of corporates buying robot to replace their own jobs which doesn’t seem fair)

Plus, they should probably add a 50% VAT or something like that on initial purchase, which covers displaced tax for at least 1-2 years and can help cover any initial teething issues or increases in social services.

I personally don’t think I can deal with living in a society where robots are so cheap that within 5 years or whatever there’s 2-3 times the human population worth of robots. Tax it all to hell, because that sounds maddening.

If a startup that never had employees uses AI, should be it be taxed differently to a startup that never had employees that doesn't use AI? If so, what is the justification for that? It seems to me it can only be some hypothetical idea that humans might have been able to do some of the work at that company, even if they never have employed people to do that work.

Should a company be taxed more when it reduces employee count for any reason that doesn't involve AI? I'd say not, because otherwise you're forcing companies that are strapped for cash into near or actual bankruptcy instead of being able to downsize.

If a company should be taxed more for reducing employee count while also using AI, but not if they don't, wouldn't you just expect companies to outsource the AI component of the work to other companies?

It seems to me that the crux of this article is trying to find a justification to tax companies working in the AI space more without clearly articulating why.

Yes, the industries of today are going through a seismic shift, similar to the sewing revolution when sewers were losing jobs to machines, or when farm workers tilling the land by hand were replaced by machines, secretaries no longer being required as managers got computers and found it easier just to send an email themselves, etc.

In the near future, just as before, people whose skills are no longer required by industry will have to adapt to survive. But taxing industry just because it's becoming more efficient just has the effect of making that industry less competitive globally.

That's the problem. AI has the same tax problems as corporations. But US corporate taxes are historically very low and easy to evade.

Arguably, a "public good" that companies provide is employment, and as they increase automation, they reduce that "public good" and direct more of their revenue to themselves rather as salary for their employees.

Henry George, and David Riccardo before him, figured that as productivity and thus wealth increases the value accrues to the land owners, not capital not labor.

This is because Land is the fundamental bottleneck of human activity, the core finite resource. And as everything else gets more productive, the land itself becomes more valuable.

So, yes, tax Land, and redistribute as a dividend to all citizens. After all, no one can be credited for building that Land.

The optimistic take nobody wants to hear: if AI genuinely replaces most knowledge work, we're not looking at a tax problem, we're looking at the first real chance to decouple survival from employment. That's either utopia or dystopia depending entirely on whether we're thinking in election cycles or generations.

Will include this link in my next issue of https://hackernewsai.com/

If machines can make all the work, then, who owns the machines is the only relevant question.

- sabbaticals/funded retraining opportunities: People leave to train creating a need for labor and at the same time increasing the value of labor. This would also create liquidity in the labor market since people would have opportunity to leave their current field and go to a different one.

- strong encouragement to retire earlier: Fewer people in the workforce and more people spending retirement means more demand for jobs and more demand for goods and services.

- limit the workweek more: Same argument as retirement

All of these have positives and negatives, but unless we start thinking about things like this we will get a world where labor is at a massive disadvantage and all the issues that leads to.

1. To finance the state's activities (mostly defense, social security, education, infrastructure and healthcare)

2. To disincentivize detrimental activities like smoking or fracking.

We should tax tech companies for their off-the-charts energy consumption which is not sustainable environmentally.

But taxing AI because it replaces jobs doesn't make much sense to me as the technology is supposed to produce more stuff for less overall human labour.

If the goal is to avoid concentration of wealth, governments should tax wealthy companies/individuals and redistribute by subsiding activities that are not as revenue generating but play other significant role in society, like reduce dependency on foreign imports or you know cough health cough care cough.

But the worst part is the idea of taxing automation and innovation. You might as well put a tax on intelligence and skill, because if you were dumber and hadn't learned anything, it would take more people to do your job. It's a comically stupid idea that no one is seriously considering.

It's just a distraction from taxing the usual suspects, the wealthy, who are more of a burden to government the more they own, and who are the least taxed they've ever been. Instead of being taxed by governments, they get direct cash grants, regulatory capture, intelligence agents and diplomats with a primary purpose of subverting and suborning foreign governments to their advantage, and perpetual wars to burn off their production.

The Western intellectual class is an annoying mix of morons and propagandists, often in the same person.

edit: US average wealth is 5x US median wealth.

I used to like the phrase "that idea is deeper that it first sounds", but Enron Musk ruined that for me.

We had this discussions for years with factory machines, and nothing came out of it. Don't get me wrong, I hate having taxes for everything (living in Germany with ~65% total tax strain for me if you include everything), but this is about power and stealing other peoples work.

Ask yourself if this is a race you're willing to lose

But as others pointed out, this is a silly anthromorphisation of AI - it's a tool, just like any software, nothing more. Tax the companies for sure, but don't treat LLMs like people or human-like entities. There's generations of automation tools that should be taxed as such, otherwise.

Revenue would then come from the consumption of economic output via a sales tax, most likely a new, progressive tax based on your annual spending rather than a flat percentage of every sale. It could be applied on the manufacturers profits via corporation tax but taxes are for the benefit of actual people so I’d lean on the former rather than the latter. The more you rely on corporation tax the more vulnerable you are to international shenanigans.

How would you feel if your take home pay nearly doubled but you had to pay X% of your credit card bill to the taxman?

Additionally the improvements in technology enables vertical integration at much lower scales and this means there is left surface area to tax, cheap raw goods go in, cheap refined goods come out. This already scales down to such an extent I DIY many personal projects with CNCs, and by leveraging services like Send-Cut-Send and PCBWay I can build all sorts of stuff that I otherwise would have spend 10x more on. Instead of having to earn more money that is taxed in order to purchase it I can build it as a hobby. Increasing the tax on the pipeline on purchased goods would just increase the proportion of projects that are more economical for me to make. My hobby would make money if I sold the items, but since they’re for personal use this does not get taxed.

Something unusual about the AI revolution is that the increase in productivity does not appear to be mirrored by an increase in consumption. More of what people consume is entirely digital, many people spend their lives scrolling TikTok and they do appear to be satiated. Sure there is a data center boom but I think that’s more of a mania and is going to end up over built.

The computer and internet revolutions are still slowly propagating throughout the world, there are still many technological gains to be made here and I think one of the limiters to adoption is the lack of available tech talent in the long tail. AI is different as it requires far less tech talent to use and additionally makes it easier to take advantage of the computer and internet revolutions. Not only can it propagate without the same limiting factors but it facilitates the propagation of the other revolutions at the same time.

That way it’s beneficial in both directions: if they stay fully automated, they’re effectively helping to fund something like a UBI through higher taxes on their automation-driven profits. But they’re also strongly incentivized to hire humans anywhere it actually makes sense, because every real job they create directly reduces their tax burden.

You wouldn't charge your CNC Machine taxes for the productive labor it produces that could have otherwise been done by a dozen blacksmiths.

By all means have corporate and sales taxes pertaining to the owner of said tools though. Even as a right-leaning individual, it's become pretty clear to me that corporations pay too low in taxes compared to the broad 'middle class'. Corporate tax cuts don't help the common man. An extra few hundred in their pockets each month certainly would though.

https://www.npr.org/2014/07/28/335288388/when-did-companies-...

I do see and agree with the dangers of AI, but it would have been a bit less selfish if we'd been this concerned when other jobs got replaced by automation.

Instead, it should be called “automation”. If we do that, it’s immediately obvious that this article doesn’t make sense. Should automation pay taxes isn’t even coherent. The obvious answer is, those using automation pay taxes, and should continue to. Perhaps at an elevated rate to compensate for the social costs.

https://archive.org/details/ageofautomation0000sirl/mode/1up

https://www.bbc.co.uk/programmes/p00hbdmj

To be clear, LLM is not real "AI", not sustainable, and already losing money with every new user.

An imperfect mirror shows only the irrational what they wish to see.

https://www.youtube.com/watch?v=yftBiNu0ZNU

I look forward to likely having a cluster of heavily discounted GPUs in a few years. =3

Theres nothing special or holy about income tax. If there’s no more income to tax, that burden gets shifted to corporate tax in some way. Whether it’s across the board or something more fussy like “taxing AI” is just implementation detail.

- Lewis Mumford, Technics and Civilization

(With the goal of pushing the company to create jobs proportional to its scale, or pay an additional Tax equivalent to the number of employees they could've payed for)

If AI is generating wealth for someone, should we tax it?

Should Amazon pay taxes for using factory robots in lieu of people?

Should fabric manufacturers pays taxes for using automated looms instead of hand weaving ?

Even if lawmakers wanted to tax AI, how would they do it? How do you measure the AI usage level at a company, or the number of workers it has displaced?

It enables a bit more automation of work than it was possible earlier. Automation alone did never reduce jobs significantly.

Everyone works less, everyone works better, we will then see how much humans we still need.

If we are oh so productive that people can make oh so much money then A) finally do collect taxes from wealthy people/companies/families and B) use those taxes to do obvious things that benefit everyone including the wealthy, like good infrastructure, healthcare, stuff that creates a stable society and seduction to face all the big problems that exist.

There are huge problems in every country and since the claim of AI is gonna create so much more productivity and wealth we should make use of the freed resources to finally tackle them instead of pushing everyone into dumb bullshit jobs.

We live in a world where rich people (and it doesn't really matter which country) use their companies to essentially live off taxes. "Oh that computer/car/jet/travel/video game/TV/house/...? I need for work. Look I have to fly to customers and oh I also have that social media thing for advertisement". Oh and then they claim they'll just leave the country if they have to pay taxes which would be oh so bad for the country they don't contribute much to.

And then the employees are essentially asked to pay the taxes to compensate. For them tax reduction means that they have to pay for things like infrastructure that largely benefits corporations themselves. But hey it looks great on the paycheck when the money you have to pay anyways isn't subtracted.

Suspect we're at a point where any single gov would struggle to control the megacorps. Not just big tech, but in general.

People who advocate for things like UBI don't seem to realize that when voters don't have a share in the productivity of their nation, they become 100% a liability. The reason democracy persists is that the powers that be aren't incentivized to destroy democracy as it would harm them too. In 10 years that will no longer be the case. Arguably, you can already see this today as the future expectations affect the present.

Funnily enough, the leader of the Sumar political party (junior member of the socialist government) was ridiculed by her words about AI (some weeks ago):

https://www.elliberal.cat/2025/11/19/yolanda-diaz-hace-el-ri...

A tax on corporate profits is a tax on cost cutting already.

A tax on “AI” is a way to compartmentalize. But you can’t, and you shouldn’t.

First, you won’t be able to formalize which gains are “AI” and which are not. Is it deep learning? If so, a gunshot detector is taxed and a McDonald’s touch screen is not. Is that what you want?

Second, a host of labor savings that don’t look like “robotics” or “AI” are also not covered. If you increase the MTBF on a traffic light, you cut the labor of light replacement. Is this morally different than a McDonald’s kiosk?

What about the traffic light itself? Shouldn’t that be a cop with a whistle?

We can do this all day.

Will it pay taxes? I think you know the answer.

And they have allllll those guns too...

As a young software engineer with a lot to learn, I would have been better off with ChatGPT or Claude than I was with experts exchange, reading manuals and banging my head on the wall until something worked. Often the SDKs I had to work with were inconsistent, buggy or required unsafe/undocumented features to accomplish basic things. I would not categorize the time I spent struggling with those arcane tools as productive learning. It was just "shit we had to deal with" to do the job.

So today, if you are a young engineer feeling like you are way behind, feeling like an imposter, feeling like you can't catch up to the industry: welcome to the club. I've been doing this for 20 years and those feelings are never far away. Instead of trying to lean on LLMs as a crutch, though, use your imagination! The tools we have now are what make us so much more productive. Use them, but don't let them use you. If you are learning especially, write the code, and let the LLM critique your work. Otherwise, give the LLM problems and ask it how it would solve it, and learn about the concepts that come out. Treat it like a Google search that just works way better and (for now) has no ads.

It's literally the same argument as how to use IDEs. The more you understand what it's doing, the better you will be at your job.

Worrying about a hypothetical T-1000 future seems less urgent than reducing the homelessness that exists right in front of us.

I recall the ML phase we had before the “AI” phase and I do not remember anyone disputing that complex mathematical models can shift the economy, make or break jobs, the whole shebang.

What really irks me about comments like “AI will/won’t xyz” is the muddying of the waters by the word AI. It’s utterly meaningless but because it means nothing it has so much power. For example:

“Statistical models will take over middle class jobs”

Vs

“AI will take over middle class jobs”

In my mind, these two statements are equivalent in what they are actually saying but the latter closes off any reasonable discussion and lets the looney bin users on here (of which there are many) start with their basilisk song and dance and all the absolutely insane hot takes that come with it.

When nobody earns is the same as everyone earns the same amount (aka inflation) as long as there have been humans, there will be someone grabbing more than everyone else.

So question would be how do you make transition into a world where there's less paid work?

Either way, I'm so sick and tired of people talking about the effect on GDP. GDP is a terrible way to measure anything remotely meaningful. GDP has gone up and up and things have gotten worse and worse for more and more people; GDP could go down a lot and things could still get better for many people. Without some kind of (in)equality adjustment, GDP is meaningless at best and misleading at worst.

The original draft was a corporate excise tax. Only after the tariffs came down did the Wall Street/Progressive coalition widen the net to wages so the Federal Reserve’s new war-credit machine could be serviced by the very labor it would soon dilute through inflation.

An alternative to putting a tax on "AI workers" could be to restore the tariff wall that protected wages. I suspect I'll be downvoted for suggesting that though.

If a company has less employees due to automation, its profits go up due to lower costs. If government tries to extract higher taxes from such company due to automation taking jobs away form people, that company will increase its prices to offset this increase in costs. But companies themselves pay no taxes, they just funnel taxes away from customers - humans. So in the end, less people will work while at the same time they will pay more taxes.

Economics 1.0.1

The government wants us to focus on who should pay more taxes, but I think we owe it to ourselves to spend 600 comments on HOW OUR FUCKING TAXES SHOULD BE SPENT!

Great so now AI will give the government 800 million dollars per year to do what, build non-existent homeless shelters in LA?

If people are not working, then they have no income - Less taxes for state

If they have no income, they can't buy stuff or services - Less taxes for state

If companies can't sell stuff and services, they are going bankrupt - Less taxes for state

If state has no income from taxes, state is going bankrupt.

Consumers, Companies and Governments all will go bust if state are not going to massively and aggressively tax AI and automation. Then pay UBI to consumers so we can at least pretend that capitalism is still a thing.

Automatic thread spinning machines took the jobs of spinsters. Did the machines themselves pay taxes?

This unbridled greed has metastasized into a global existential threat, and needs to be aggressively eradicated.

https://en.wikipedia.org/wiki/Proletariat

People on the left love to say “true communism has never been tried”.

Well, when you live in a world where supposed capitalist countries forcibly take 46% of the GDP to be controlled by the government, it’s more accurate to state that “true capitalism has never been tried”.

https://en.wikipedia.org/wiki/Taxation_in_France

Just saying ....

Competition is the foundation of all of the positives of market dynamics. Nothing good happens in a capitalist society without competition.

Assuming that any gains in productivity will exist _solely_ to fatten the pockets of corporate executives makes sense if you think that all goods of an industry are made by one company.

However, this isn’t what happens. Pricing in a competitive environment is largely driven by what producers can profitably outcompete and deliver. Not the maximum they can charge the consumer…

how to extract rents contributing nothing

Look, rich countries like the United States who have been obsessed with neoliberalism and laissez-faire Capitalism have spent the past fifty years continuously slashing tax rates on everything and everyone (but particularly on the wealthy and homeowners), leading to gargantuan debts and deficits. Re-ramping that taxation on labor now, when it can’t even afford core necessities due to wage stagnation and inflation via corporate greed, would be equivalent to lighting off fireworks while pumping gas: a very bad idea.

What’s needed isn’t a simple tax increase, but a fundamental rework of the tax scheme. When a majority of wealth is coming from Capital Gains (housing profits, investment returns, etc), then that’s where a majority of tax revenue should be coming from. That’s a more effective way of taxing AI and labor, provided you also rework structures to eliminate the myriad of loopholes people and businesses use to duck taxes on that income. You’d also need to rework incentive structures to limit the collapse of labor until such time as society and government can be reworked around a post-labor future: tax penalties for layoffs by profitable firms or firms who have a disproportionate amount of workforce on income-based government welfare programs, elimination of subsidies in profitable segments of the marketplace, stringent accountability standards for government contracts, labor protections in general, job guarantees, higher minimum wage, the list goes on and on.

What frustrates me is that these sorts of posts get trotted out as “big think” arguments about AI, when in reality they’re about thirty years late to the party and woefully unaware of the complexity and risks of the issue at hand. They want to debate hypothetical minutiae instead of acknowledge the present reality: that workers are being permanently displaced by AI now (or at least by AI investment), and that the big players, despite any public statements promoting or encouraging regulation of their industry or the need to help workers, are presently doing everything in their power to stop governments from addressing either of those things lest their expansion be curtailed.

I suppose most of the taxes should be paid by the electric utility, since it did most of the work. /s

EU in a nutshell.

It's disingenuous to claim that companies are paying the fair amount of taxes on their earnings.

Plainly speaking, the human labor who will be replaced pay a higher percentage of their income in taxes that corporations.

https://observer.com/2024/11/sam-altman-openai-salary/

Simple well known and preventable accounting tricks make the rich never need to pay a fair share. Yet regular people are now even seeing their electricity bills go up because they're using the infrastructure to such an extent.

Yet the sentiment here is : Well don't be silly, they're making profits so they're paying taxes.

They're not making a profit, yet they're reducing employment, increasing services bills for everyone else.

https://www.iea.org/news/ai-is-set-to-drive-surging-electric...

Why would taking scarce resources away from productive businesses and allocating to unproductive things be good for anyone other than government bureaucrats?