OP-ED: The American Prospect: Tax AI to Create Jobs

Most people involved in artificial intelligence can agree on one thing: AI is coming for your job.

Anthropic’s CEO predicts Great Depression levels of unemployment in the next five years. Bill Gates says that within ten years humans won’t be needed “for most things.” Corporate leaders say AI-driven layoffs are already starting, with Intuit firing thousands just this week, citing AI.

Businesses justify their huge investments in AI by committing to spending less on labor, and AI firms sell their products promising to help them do it. Regardless of whether AI is yet good enough to replace workers, their plan is clear: lay off millions of workers, justified by AI.

One entity seems totally unaware: the United States government. The only major AI proposal advanced this Congress was a failed effort to prevent states from regulating the industry.

The path we are on is clear: AI will make a small number of investors and executives even richer, while it eliminates jobs for millions of Americans—and the government does nothing about it.
 

An AI tax should target the companies that stand to make billions of dollars by laying people off.

Nothing about this is inevitable. We can and must choose a different path. Most Americans want the opportunity to work hard at jobs worth doing, and we should make a commitment now to making sure the AI revolution does not leave Americans with a higher unemployment rate.

As a first step, Congress should pass a new AI tax, both to slow down job loss and to fund a jobs program that makes sure we do not leave millions without work. We can respond to the prospect of Great Depression–level unemployment with the kind of mass employment–creating program that Franklin Roosevelt spearheaded.

AI companies already keep track of their usage; that’s how they know what to charge their largest customers. Currently, usage of AI products is measured in units of text called “tokens.” It is possible to levy a tax on that token. To avoid companies gaming token counts, the tax should measure both the number of tokens and the underlying computing power used to train and use AI models.

Taxing AI directly ties the solution directly to the problem. If AI use grows quickly, driving layoffs alongside it, the revenue from an AI tax would go up too. Unlike traditional corporate taxes, an AI tax like the one I am proposing works even if employers fire workers before AI companies show a profit.

This AI tax should target the companies that stand to make billions of dollars by laying people off. The tax should be levied on AI providers, not consumers, and it should charge a higher rate for AI used by big corporations rather than individual users.

One goal of this tax should be to shift incentives to save jobs. Our tax system basically gives companies huge tax savings when they automate a job, because we currently tax wages but not AI. If you replace a worker with an AI-powered robot, you save on payroll taxes: That’s functionally a tax break. That’s wrong, and an AI tax would start to change it by leveling the playing field.

Equally importantly, the revenue from this tax should be invested directly into creating jobs for unemployed Americans. While some advocate for a future where mass unemployment is tolerable because of universal basic income, I think history clearly shows that most Americans want the opportunity to work hard at jobs worth doing. And there is no shortage of useful work that we need humans to do, from caring for our aging population to fixing our broken infrastructure and teaching our kids.

An AI tax–funded jobs program should draw inspiration from the New Deal–era Works Progress Administration, which employed millions of Americans. While the program had flaws that we can learn from, it helped pull America out of the Great Depression, and it shows how it is possible for the government to quickly create jobs at scale when it decides to do so, while leaving a remarkable legacy of physical infrastructure, beautification, and artistic creation.

The response should also include job retraining programs—but only funding training at a time of mass unemployment may end up being like offering swimming lessons to passengers of the Titanic. Direct job creation will also be needed.

Our goal should be simple: harness the wealth created by AI to create jobs at the same pace AI eliminates them, so that AI does not raise our unemployment rate. If the AI tax rate needs to change to meet that goal, it should be adjusted. We can look to models like the Universal Service Fund, which requires telephone providers to subsidize telephones for low-income households. That fee is adjusted every quarter to make sure it generates the revenue needed to meet its goal.

Some will argue that taxing AI may slow down AI adoption by the big companies we are taxing. This is a feature as much as a bug. In the long run, an economy with high-wage jobs for more Americans is better for all of us, and in the short run, if we delay layoffs and give workers more time to adapt to a changing economy, that is a good thing.

Others will say taxing U.S. companies will make us less competitive with China. I am not interested in a race to the bottom where Chinese and American workers both end up victims of a competition where only the very wealthy actually win. America can lead the world by showing that we can prevent mass unemployment in the age of AI.

In recent weeks, some corporate leaders, realizing that marketing a new technology as sure to eliminate every job in America may not have endeared them to the nation, have taken to arguing that AI will not in fact cause mass job loss. I hope this is true. Yet I would much rather have the infrastructure in place to deal with a job crisis that does not emerge than fail to prepare for a job crisis that does.

Nothing about this is inevitable. We can and must choose a different path.

Congress should act now, and not wait to see if the worst-case scenario arrives. AI companies are already pouring hundreds of millions of dollars into elections to try to shape what regulations get considered. We cannot wait for these companies to become even wealthier and more powerful.

Of course, taxing AI and creating jobs is far from the only policy change we need to address the growth of this technology. We will need protections for the rights of workers, for those whose intellectual property (or keystrokes) are being used to train AI, protections against AI-driven loneliness and social isolation, rules against mass surveillance, and safety protocols to prevent the dangers from out-of-control AI.

But passing a tax now is an urgent step Congress could take to address one of the biggest problems AI will create. Equally importantly, it is a first step toward saying clearly that we will demand AI work for all of us, not just the wealthy and powerful.

Fundamentally, our approach to AI asks us what kind of country we want to be. Do we want to live in a country where we go through enormous changes driven entirely by the desire of wealthy investors and CEOs to get richer? Or do we want to make choices together about our shared future?

In a speech advocating for the Works Progress Administration, FDR spoke of the nation’s recovery: “It is more than the recovery of the material basis of our individual lives. It is the recovery of our confidence in our democratic processes and institutions … We have in the darkest moments of our national trials retained our faith in our own ability to master our destiny.”

We may be entering another dark moment. Here too, we must choose to master our own destiny.