The taxman will eventually come for AI, too
bloomberg.com
bloomberg.com
Maybe Excel could add a feature where taxes are collected every time you add a trend line to a chart. I hope they charge more for polynomial fit - it should be based on number of model parameters right?
Accordingly, AI won’t be sending kids to public schools, collecting Social Security, or benefiting from Medicare. Most importantly, AI won’t have seats in Congress.
If AI does productive work, individuals and organizations who leverage it successfully will make more money, which is taxed progressively (in theory anyway). At higher brackets, income tax can bring in more revenue than payroll taxes.
Tl;dr Humanoid robots may one day demand equal rights, and they may get them.
One simple solution would be to stop taxing work and tax profits instead.
Too many people thing the only way to fund public programs is taxing labor or income, when that is the most unethical and least efficient method of taxation there is, and leads to all kinds of abuse by government.
It is not a zero-sum calculation and AI/robots represent a huge transfer of social wealth (taxes collected for use by society) to the rich.
This "income tax for robots" idea is one of Bill Gates' ideas that has been kicking around for over a decade, and will surely fall victim to the same type of loopholes the rich presently exploit.
Yanis Varoufakis has been criticizing this Gates approach and proposing an alternative concept which he calls Universal Basic Dividend. Under this scheme, the use of automation to generate capital would be socialized through the generation of shares, say 10% ownership of the firms which utilize automation to replace labor, which are owned by a public trust which distributes dividends from the firm's profit to every human in the country equally.
We already have mechanical harvesters and computers and looms and whatnot. I don't see a step change at llms.
One thing that's different (if you buy into the hype) is that the jobs that are threatened this time are held by educated people. When it was truck drivers (now a lucrative job in no danger of replacement) being threatened, we told them they could learn to code. Now that people writing code and doing powerpoints (if you believe the hype) are threatened, we need UBI
There is no "right time" for it, or it has always been the right time for it, depending on where you hang your hat around more fundamental issues.
I do think capital returns should be taxed similarly to income, but it's not simple to accomplish. One thing to bear in mind on taxing return on capital is that it's already taxed several times, once as corporate income tax and then again on dividends or share price gains. So the real tax on capital returns is the combination of these, and sometimes other taxes as well. There are some common loopholes that should really be closed though, such as exemptions for inherited capital.
The larger portion of social wealth lost is the income to current laborers which is lost to increasing automation.
The 10% is an arbitrary starting point and should be adjusted based upon what is the appropriate representation of the displacement of labor by automation, which will surely increase along with corporate profits increasing with less salaries being paid.
The idea isn't to fully socialize and subvert capitalism, but to keep capitalism alive long enough to ethically support humanity as long as it is necessary.
Tyler Cowen would be one of the least likely economists to ever acknowledge this though.
If you create a fleet of robo-semi trucks and take over the American logistics business by cutting 80% of the transportation workforce, you are creating significant social harm in the pursuit of profit. Increased taxation could either act as a disincentive to the labour-pocalypse or provide revenue to help society smooth the career transition for those workers.
This of course will never happen in the US.
Instead, we tax income.
Progressive income taxation 1) does not discourage consumption as much as a higher consumption tax for those with lower income (which is most people), 2) encourages investment for companies and individuals with higher incomes.
1) Everything becomes cheaper due to this automation, and
2) The cost of public services that these taxes pay for become cheaper due to this automation
The representation structure that GPT-5,6,7,... would design is going to be incomprehensibly more complicated and nuanced than 1 person = 1 vote. I don't know what it is, but you're trying to map an alien onto human institutions in a way that is not sensical.
But let me go on a tangent. When will we have AI governments and AI taxmen? Would I rather work or for the taxman of some loudmouth who convinced people to vote him in the ballot , or for an AI that is proving to improve every year (with politically- and hopefully democratically defined criteria)? And how are our intellectuals preparing us for this instead of dooming-and-glooming about AI ?
Not a particularly useful line of inquiry unless you're willing to get full political and legal realist with a dash of Mao, and ask: how is the cybernetic government kept in power? Who's pulling its strings?
We can set this metric before the wheel was invented where we could only carry stuff on our backs.
How is AI any different?
> So it won’t be possible to assign all AI income to their human or corporate owners, as in many cases there won’t be any.
It’s not possible for something to be owned without a legal entity being the owner. Whether that’s a real person or a corporate one. For an autonomous agent to come into possession of an income in the absence of an owner, some type of fraud must have occurred, which would invalidate the basis of any “property rights” the author is supposing it might have. The authors idea of laundering your labour through an autonomous agent is even more fantasy based. Honestly who approves this sort of thing for publication?… seems like it’s just playing into peoples fear of AI
Ultimately, AI tax should contribute to a SWF only to be redistributed as UBI. I wasn't keen on the idea of Basic, but it makes sense in an AI-augmented sci-fi society.
Problem is that in practice they will be mismanaged by some senile politicians and end up in the pockets of a few well-connected individuals.
I'm all in for fair taxation to provide a good safety net for people, but we first need to ensure those taxes are actually being used efficiently and not as politicians' friends slush funds or cash cows for consultancy companies.
AI companies can't use the law to force me to pay them. Governments can and do.
Norway and the Alaska Permanent Fund prove that this is not necessarily the case.
The problem is there are relatively few SWFs in the world, and those that exist tend to be in oil dictatorships where no one is allowed to question the ruling class.
The "unowned" argument is obviously not something that should be given the time of day, since valuable capital assets that require energy inputs are always going to have an owner, but it might raise more serious jurisdiction questions as to what law applies to an AI and content put out by AI.
You already can hardly tax a software company incorporated in Hong Kong (with 0% tax on foreign income) How can you tax an AI paid in digital currencies and incorporated nowhere?
Ultimately, we might have to drastically change how and where we tax people. There are many theories on this. I like geolibertarianism: tax the extraction of natural resources/land ownership.
Similar to republicanism during the French revolution or the spread of communism in the 50s, it would likely invite invasion from foreign nations run by elites that are acutely aware of the threat this ideology poses to their power and privilege.
Even getting it on the agenda in a democracy is a struggle against entrenched oligarchs who own a propaganda megaphone: https://www.dailymail.co.uk/news/article-4575382/How-Labour-...
(LVT strictly speaking exists in a few places like Hong Kong but it's always very low, way below the threshold where it would be considered a threat - e.g. 3%)
I mean the article starts with the claim (and which I think is clearly untrue) that "there are now autonomous AI agents, which can in turn create autonomous AI agents of their own". Emphasis is on the use of the words "there are now". As of yet, I have not come across any AutoGPT/BabyAGI variants which can 'create' new agents or agents of their own.
To top it off, this claim is supported by a tweet, which nowhere states/mentions any AutoGPT/BabyAGI variant which is capable of creating their own agents.
But lets move beyond the tech aspects, since the article doesn't really discuss anything about it anyway and because I know a thing or two about tax law. Now considering that this article is being published on Bloomberg (that too on a topic such as taxation) and that the author is an economics professor, one would assume that the article would discuss some real life issues or some practical issues in taxation of AI related services. But no no, clickbait-worthy articles require some clickbait-worthy content and hence we see some hot tax law takes mentioned in this article. I have extracted them below:
(1) "Why own an AI and pay taxes when you can program it to do your bidding, renounce ownership, and enjoy its services tax-free? It seems easy enough to disclaim ownership of autonomous bots, especially if they are producing autonomous bots of their own." - I mean how can an article on tax law ever be complete without mentioning tax avoidance strategies?? ALL YOU NEED TO DO IS TO RENOUNCE (LEGAL) OWNERSHIP AND THAT'S HOW EASY IT IS TO AVOID TAX! and no the tax authorities will not question you as to why are you receiving money from an AI on a regular basis -_-
(2) "Additionally, maybe there should be a kind of gift tax, paid by humans, on any benefits we receive from an AI, whether we own it or not." - Of course, why not? because when calculators are used to solve problems faster, the money earned from such problem solving using calculators was also taxed at higher rates than if you would had solved the problem without using one. Apparently that's how governments' use tax policies to promote innovation - tired of the existing monopolies? Want to come up with new solution? No problem, just be ready to pay higher taxes!
(3) "AIs might be very good at providing in-kind services — improving organizational software, responding to emails, and so on. It is already a problem for the tax system when neighbors barter services, but the AIs will take this kind of relationship to a much larger scale." - Wtf? Let's not even discuss the stupidity in: (i) comparing an AI as your neighbour, and (ii) assuming that availing of services from an AI will be the same as a barter exchange between you and your neighbour. Let us stick to tax law. Since when did it become a good reason for governments to impose taxes on companies for implementing 'cost saving measures' such as use of LLMs for generating email responses? Were any taxes imposed on companies when they started communicating through Email instead of physical mail? or when they started conducting virtual meetings instead of physical meetings?
(4) "Forget about hiring AIs, actually: What if you invest in them, tell them to do your bidding, repudiate your ownership, and then let them run much of your business and life? You could write off your investment in the AI as a business expense, and subsequently receive tax-free in-kind services, in what would amount to a de facto act of exchange." - If I am to write off my investment in the AI as a business expense, how will I repudiate/renounce my ownership in the AI?????? If I am investing in an AI and the AI will generate money for me, how will it be considered a de-facto exchange (this is how investments usually work, so all types of investments should be considered de-facto exchange)??? Moreover, if the AI is capable enough to "run much of my business and LIFE" then I don't think we should be worried about, TAXATION, of all other things.