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Our socioeconomic system stands at a critical juncture as artificial intelligence poses a significant risk to employment. In a capitalist society, individuals rely heavily on jobs for their livelihoods, and consequently, the U.S. government depends on taxing labor income to generate revenue.
As artificial intelligence continues to displace job opportunities, a growing number of workers may experience job insecurity, which can lead to a substantial decline in federal tax revenue. Immediate and radical measures are necessary to mitigate the looming threat of economic collapse and explore potential solutions.
It is imperative to rethink our approach to taxation. Transitioning from income-based taxes to alternative sources is essential, especially as support systems for the unemployed must adapt to accommodate an expanding population pushed out of the traditional job market. Given that AI adoption replaces human workers, taxing the commercial use of AI systems could compensate for the lost wages and help replenish the dwindling federal tax revenue.
The rapid advancement of AI technology raises valid concerns about the future of the workforce. While many jobs are still secure, the reality is that sophisticated AI systems will soon outperform humans in a variety of tasks. From manufacturing to customer service, and even in creative fields such as writing and music, AI capabilities are expanding dramatically.
The potential applications of AI include a wide range of robotics designed to take over physical labor in sectors like construction and healthcare. Although this shift will not happen overnight, the inevitability of AI integration into the workforce poses profound implications for the economy. Companies are likely to continue replacing human employees with AI-driven solutions to cut costs and enhance productivity.
Envisioning a future where robots perform all the necessary work presents the challenge of addressing the societal consequences of widespread unemployment. The immediate concern is that without jobs, individuals will face difficulty securing basic necessities such as food and housing. Additionally, the revenue system that currently relies on a labor-based tax model will suffer as unemployment rises.
Currently, taxes derived from payroll, income, Social Security, and Medicare comprise over 80% of federal revenue. An increase in unemployment signifies a shrinking tax base expected to lead to a drastic reduction in government revenue. This scenario creates a dual challenge of decreasing federal income alongside a growing need for financial aid among those affected through no fault of their own.
Traditionally, the concept of supporting the unemployed, whether through welfare or Universal Basic Income, has raised concerns among many. Critics argue that redistributing wealth from workers to non-workers evokes unfavorable comparisons to socialism or communism. Nonetheless, taxing workers to sustain a non-working demographic requires a healthy labor supply, which will be absent once AI takes over those jobs.
However, with AI advancement, we have an opportunity to develop a new funding mechanism for support systems like UBI. By introducing a rational framework for taxing AI-generated work and distributing these taxes back to citizens, we can provide a lifeline to those displaced.
This proposition differs significantly from traditional welfare systems. Instead of reallocating the wealth of individuals, we propose generating funds from AI outputs and sharing those with the broader population. This not only caters to those affected by job losses but also ensures a more sustainable economic model.
Additionally, given that AI systems leverage vast quantities of public data for training, there is a strong economic rationale for implementing taxes on these technologies to reimburse American citizens. This approach serves as a fundamental return for their contribution to the data pool.
Despite some reluctance among Americans regarding higher taxes on businesses, it is essential to highlight that many companies will benefit economically from replacing salaried employees with AI systems. The savings realized by eliminating jobs that cost between $30,000 and $300,000 annually will present unique advantages. For AI systems operating outside physical limitations, such as cloud-based models, costs could drop dramatically, yielding even larger savings.
AI systems have the ability to function continuously without needing breaks, creating new economic value with every task they complete. When an AI robot produces goods—from sandwiches to automobiles—it generates wealth by transforming raw materials into marketable products. This value generation, traditionally split between the employer, the worker, and the government, changes fundamentally with a robot in the equation.
If humans are to remain stakeholders in value creation, we must find ways to reintegrate them into this process. One of the most poignant solutions is to implement taxes on AI-generated outputs, channeling these resources into programs that support American citizens through UBI or alternative measures.
Determining how to quantify AI work in a practical and just manner may present challenges. However, regardless of potential obstacles, the pressing issue of AI supplanting a vast number of jobs looms large. Whether through taxing AI output or designing another framework, it is critical we begin to formulate and implement practical solutions promptly.
We have the opportunity to cultivate a bright future where individuals can engage in fulfilling pursuits, liberated from the necessity of traditional employment. The alternative to this vision would spark a dystopian reality, reminiscent of cautionary tales like The Hunger Games.
Disclaimer: The views expressed in this article represent the author’s personal opinions. The content should not be interpreted as reflective of the author’s professional affiliations.
