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.
However, the root questions are: what should the state provide, how much, and of what nature? A secondary question then becomes how important the redistributive aspect is. That’s what you’re seemingly alluding to when you say: people work, get taxed on it, but others automate that work and this automation does not get taxed.
Following that line of thinking makes sense, but it also contradicts the core benefit of automation, which is to delete non-needed work, make things cheaper, and make the value creator richer.
If the goal of redistribution is usually that “more” people reach a higher standard of living, then adding taxes and friction to processes like automation may conflict with that goal, given that automation is arguably one of the strongest natural drivers of higher living standards overall.
Of course, the counterpoint to “what and how much should the state provide” is “who should pitch in, and how much,” which is what you’re focusing on. I mostly agree that everyone should be taxed fairly, but I also see many exemption cases, because taxes are friction and we often want certain things to be frictionless. For example, I would oppose taxes on life-saving surgeries. But where do you draw the line? What about automation that indirectly enables or improves life-saving surgery?
I like the idea of classifying it into four buckets: those that are below tax net gains for a country, those who are above and those that are above the tax net gains using just their wealth, and then the government.
This could be almost any tax system depending on the what one views as "fair".
The cost of providing the basic obligations and debt service of the U.S. amounts to roughly 1/3rd of the U.S. GDP, while taxation on any activity induces friction and higher costs - the bill will need to be paid either via capital markets or taxation. The investment in automation is no more important than food, or my children's education in my view.
Taxation is generally preferable for capital owners compared to currency debasement and forced debt purchases as it maintains boundaries on what the state can and cannot do. If the current trend is towards a greater share of the economy accruing to capital owners is maintained, then capital taxes will eventually need to rise to sustain state obligations.
The right question is who benefits the most from state’s services. For example if a whole lot of security, legislative or admin services go to protecting the capital, then those who has the most capital need to chip in the most.
> redistribution is usually that “more” people reach a higher standard of living, then adding taxes and friction to processes like automation may conflict with that goal
This is basically a 50 year old trickle down argument. But real wages have not increased in comparison to gdp since 70s, so nothing trickled down. We are demonstratedly bad at sharing what we have achieved together, no reason to believe more tech will magically get better treatment than that.
Besides redistribution is not about shifting the curve up, but making it flatter - see gini coefficient.
> the core benefit of automation, which is to delete non-needed work, make things cheaper, and make the value creator richer.
Except the era of classical capitalism and inventor’s profit is over, since 70s it is rentiers unreciprocated extraction on top of purported value people didn’t necessarily ask for or need in the first place. Likewise most people aren’t dying for AI automation, and not even for structural threats; it is not even proven that it will provide a net total productivity gain when the hype cools down, despite being shoved down people’s throats.
Let’s not kid ourselves, there is little concern for real value creation but a capture-the-flag on a gigantic data-moated compute monopoly. Whatever democratic means enabled proper taxation would have already prevented this type of speculative berserk, failures of which I assure you will be socialized.
So friction = societal consent, internalizing externalized costs, revealing what is actually value versus monopolist’s rent. It is healthy for the society, it is healthy for capitalism.
I agree it shouldn’t be an employer item too, but whatever employers lose on premiums, they get more on an overall stickier and cheaper labor supply.
[1] one could argue the productivity of healthcare increased, and the data indeed supports this with the overall life expectancy increase from 70s to now mid 70s plus quality of life treatments. But again most of the spend is actually on the tail end at this age group, which raises the workers’ premium without delivering the benefit. Therefore not much structural gain for the actual working age employee.
You shouldn't.
>and employers probably shouldn't even be involved in sponsoring group health plans in the first place.
They are free to lobby for socialized medicine, but they don't because they like how the current system helps lock employees into bad jobs for any amount of healthcare.
From the perspective of the employer, that's real money, no different than if they had paid the $20,143 directly to the employee as wages. It's not the employer's concern what happens to that money after they fork it over.
The correct number to use is called "total employee compensation". This includes:
1. salary
2. paid days off
3. health care benefits
4. retirement benefits
5. employer 401k contributions
6. incentive stock plans
7. taxes paid on behalf of the employee (such as the so-called employer's contribution to social security)
8. free food in the company cafeteria
9. any other benefits that cost money
The cost to employers for these benefits adds about 30% to total employee compensation.
The core benefit of automation is to give back time to humans to free us to do more creative things with our big beautiful brains. At least, that would be the core benefit if humanity was on a positive trajectory.
The problem is that libertarians have been able to retcon their fan fiction into what Capitalism is and gloss over the original anti-rent seeking, anti-monopoly, pro-government oversight parts that Capitalism REQUIRES in order to stay healthy,functioning, and beneficial to society. And people just accept that 'capitalism good' = 'late 20th/early 21st century libertarian fanfiction of what capitalism is' is the definition of Capitalism, when it is very far from it and has zero relation to the functional Capitalism that lifted the world up.
Combining this late 20th/early 21st century fanfiction version of Capitalism with the current tech company goals for AI is something totally new, zero percent Capitalism, and 100% would be hated by original Capitalist thinkers as damaging.
This is extremely aggressive framing. It smashes together two wildly different kinds of citizen with wildly different, often opposing incentives and access to power: those who sell their labor for a living and those who literally own the economy. It poses them both in opposition to the government which has 1/5th the revenue of the latter.
If capital is the big bad, this framing is a mind-virus that makes the problem hard to think about and speak about.
> friction
Friction plays a key role in "the unreasonable effectiveness of capitalism." It's a big part of the reason why we can rig the game in favor of capital and not simply have the economy immediately degenerate into "capital rules, labor drools" due to the exponentials inherent in "rich people get paid for being rich in proportion to how rich they are."
Removing friction is not necessarily a net good if it contributes more to distributional problems than it relieves in deadweight loss. Nobody is a fan of deadweight loss, but I'd be a lot more sanguine about eliminating it if I thought we had a credible handle on the distributional problems. But we don't.
Since all my competitors are also running dark factories, we compete essentially on source materials + energy (assuming we have similar design/quality). Margin would be eventually razor thin. The dark factory does not make much capital gains, even as it produces 1,000 gizmo per second.
The capital gain is not much , but since we have only a handful of employees, that is enough to pay everyone a decent wage, after paying for the factory itself, source materials and energy.
How much tax do we expect to get from this gizmo company ? 10 years ago, to produce the same gizmos, I needed 5,000 employees, the unit price was way higher, and had higher revenue. But since AI and dark factories came, the prices cratered, instead of 5,000 jobs, we only have 5 jobs to produce the same.
Sure the 4,995 unemployed might be able to afford the gizmo, but the state does not receive the same taxes. So what happens to those 4,995 unemployed people ? who is paying for their health benefits and social security (retirement) ?
I am wondering how best to solve that equation ?
But that's good, right? It means that the difference between what workers get paid when they do work and what they pay when they buy things is small.
> Sure the 4,995 unemployed might be able to afford the gizmo, but the state does not receive the same taxes. So what happens to those 4,995 unemployed people ? who is paying for their health benefits and social security (retirement) ?
Let's consider the two possibilities here.
The first is that we automate everything. This is implausible, but let's consider what would happen. Well then necessities would be free, because there is no labor cost to produce arbitrarily many solar panels or skyscrapers or mine asteroids to get unlimited raw materials etc. So then you don't need taxes because nothing costs anything.
The second is that there is still work you need people to do, and then they do that, and still have jobs.
And the more stuff you do automate, the less expensive it is to produce things, and the less assistance anyone needs to afford the now-lower cost of necessities. So if you get halfway between one and two then that's still fine because costs go down in proportion to the lower demand for labor.
The real problem is if the cost of necessities are held artificially scarce through regulatory capture and zoning rules. But that's not an automation problem, that's a government problem.
So are we're simultaneously facing a big unemployment crisis, and a big shortage of health care providers and retirement care takers?
Also that's a singular industry, if the current crop of AI companies deliver what their hype and valuation demands it's a shock across the whole economy not isolated.
200 years ago, 95% of the workers in my country worked in subsistence farming. Today, only 2% are farmers. The whole spectrum of labor has turned upside down and upside down again, in that time. It has certainly not been a singular industry.
I think it's weird there's so much pushback on the idea that if the hype proves true and it /can/ replace basically any knowledge worker (and potentially drive robots replacing physical laborers) that that would have a bit of a larger effect than inventions that affect some parts of some industries...
There's plenty of space to think it just won't happen (where I'm personally at, at least on the current LLM driven versions) but if it does work the broad spread of the impact would require a huge amount of change all at once.
My job title did not even exist when I was born.
If you're referring to some equivalent of wealth tax or inverse of accounting for deprecations in terms of assets, then that seems pretty problematic. 1) how do you asset the value of something until someone pays something for it? Unlike homes, where you can compare roughly to those around you, this seems much more dynamic for software / AI. 2) Let's say we are able to assess the value, so now a startup with software but no revenue has to pay taxes? Where does the money come from?
Corporations pay taxes on profit. Shareholders pay taxes on dividends and capital gains.
Shouldn't we also not do that?
Suppose you pay a 25% income tax and then a 10% sales tax. You're paying the same amount, almost a third of your income, as you would with a 47% sales tax. Which to begin with misleads people into thinking their rate is lower than it is, and on top of that incurs the significant overhead of needing two independent collection infrastructures.
Why isn't it better to just pick one?
Capital Gain tax occurs when you sell an asset for more than you paid for it.
AI (software) is not an asset, and I'm not sure how you'd sell it. Computers and robots are assets (although they typically depreciate not appreciate.)
Either way capital gains tax is applied to the asset not the productivity of the asset. The productivity in turn is taxed as part of income tax.
Perhaps I have misunderstood your point though?
Property tax is fairly regressive because everyone needs somewhere to live, property tax gets passed on as higher rents and living space generally scales sub-linearly with income. It's probably not something we should be emulating, especially if you're going to try to apply the same rules to small business owners.
By the local municipality, not the federal or state government.
Except in a minority of cases (e.g. NYC), it is states and the federal government that taxes income and capital gains, and they are already not taxing citizens on the y realized value of their home.
So if one is upset about that, you have to take it up with local elections or introduce a measure with your state to prevent municipalities from levying this specific tax.
Tax on property is a completely different tax which works in a different way, and has a different name. A new tax on possession of robots could completely be a thing, but it just wouldn't be called a "capitol gains" tax.
The fact that an earned derivative gets heavily taxed and an unearned derivative gets lightly taxed is so stupendously wacky that the absurdity is obvious, but the integral is the core problem.
You could reset realized long term capital gains taxes to match income tomorrow and it would not be a huge material difference in the budget. I am 100% for doing this anyways simply because it’s fucking absurd any professional W2 employee is paying more percentage in taxes vs someone who just happens to have idle cash at hand - but it’s more of a “social contract” thing for me than actual tax policy.
The issue really is tax deferral strategies and wealthy folks being able to consistently find strategies to roll over investment dollars into new investments without ever having their gains be subject to pretty much any tax. Stuff like stock buybacks, tax loss harvesting, 1031 exchanges etc.
I don’t think the “loans against a stock portfolio” tax dodge thing is nearly as large as social media decided to pretend it is - but I am very much in favor of taxing any realized value at regular capital gains rates at the time of realization. This means you will probably need to sell a bit of an asset to pay the taxes - which is the entire point.
Unrealized gains are tricky. I’ve been in a situation as a bootstrapped startup founder where I owed “phantom” tax on money I had not yet realized and ended up taking a loss on years later. Zero ability to recover those taxes paid. It put me into a hole for over half a decade. This gives huge preference to those with existing wealth and makes it even harder for someone with nothing to “come up” without handing out a majority share of their company/idea to idle capital. Especially if you’re just doing regular economy things to create a small business doing boring stuff at single digit net margins.
I am of course deeply sympathetic to the "founder scenario," but I'd rather address it specifically than hobble tax collection generally. This could be done by a "payment in-kind" mechanism. If we wanted to steer it towards startups I'm sure the valuation rules could be set to do so, but I'd personally like to aim higher and go for progressive taxation on the basis of market cap to encourage company splitting and competition. Industries with the most dramatic returns-to-scale (semiconductors) could be exempted.
That said, the (in)ability for new founders to self-fund is deeply tied to the same gini coefficient story as the rest of the economy, so policy that addresses the gini story should help bootstrappers as well.
Now think about how they're going to respond to it.
A major problem with taxing unrealized gains is how to measure them. For publicly traded companies that's pretty easy -- the stock is undergoing regular market transactions so you have a pretty good idea about the price. But what about assets that aren't? Closely held private companies that aren't listed on an exchange and haven't undergone any stock transactions in ten years. Art. The value -- or liability -- of a private contract for the future sale of goods at a defined price, when the market value of those goods might have since changed, or depending on what they are, be indeterminate.
It creates endless opportunities for playing games, and that complexity is exactly what allows the people who can afford fancy accountants to pay less in tax than everybody else. If you want to fix it you need to make the system simpler rather than even more complicated.
The fact is that we have no problems with taxing consumption (billionaire buys yacht) but we have an extremely sensible aversion to taxing money spent on productive investment (company pays to build new factory). So business expenses are tax deductions.
The sensible way to handle this is to just use VAT, but then people say "what if they reinvest everything into new ventures and stop buying yachts"? The answer to which is supposed to be "that's what we want them to do". (They also say "consumption taxes are regressive" even though that's easy to fix by giving everyone a large fixed refundable tax credit.)
So to placate them we use something claimed to be an income tax and then push on it until it acts like a consumption tax. Dividends are taxable, but here's a 401k that makes them not while you're of working age and so you only have to pay the tax when you retire and start spending it. Capital gains are taxable, but only when you realize them, so they get deferred as long as you keep them invested in the same company but if you withdraw the money to spend it, that's when you pay. And so on.
This is, of course, dumb, because it makes everything unnecessarily complicated and creates lots of opportunities for tax avoidance, and because it makes the problem you're going to complain about next worse: If they keep reinvesting the money then there is too much economic power in the hands of too few people. But look at what you've wrought. Now if someone invests in a company they get to defer the taxes until they want to spend the money or -- and this is the big problem -- they want to invest it in something else. You have to pay the tax now if you want to do that.
Which means that everybody wants their money to be in some ever-expanding megacorp that allows them to defer the tax until they actually want to spend it, instead of taking the profits from one company and using it to invest in a new one. Which is the thing that wouldn't have been penalized if you were actually using a consumption tax.
And the corporations are actually the problem, not the owners. However much power is concentrated into Microsoft or Apple or Google, that's how much power the CEO of that company will have, regardless of what percentage of the company's stock they own. So you can't fix it by taxing the owners, you have to fix it by making the companies smaller, and that's the thing the existing system makes worse.
I’m happy for billionaires have their net worth go up, as long as it can be taxed if any amount they realize.
So this includes using their networth as collateral, donations (even to charities) and passing as inheritance (which should be taxed upon death)
And if the margin all tax rate over a 1 million is extremely high, then it’s pointless being a paper billionaire. People would actually spend their wealth and contribute to the economy
It is normally not a fixed percentage of your value, but simply "here's what the county/city paid this/next year, divided amongst the properties proportionate to the value."
Some, like sewer, etc, are per-property, but most are done via the above.
California is an outlier because of Prop-13 but that makes it usually better except when buying.
Side-effects of this can mean that development in your district can reduce your tax rate, depending on what kind of development and who lives there (as property tax is often mainly a school tax, a development for 55+ will bring in more tax payers but not increase the school burden noticeably).
it is absolutely a tax on unrealized gains
and it's a huge problem to where people who bought the house long ago (or it was passed down to them) but whose income hasn't kept pace (like many people's) can't afford the increased property taxes anymore and have to move
It's a good thing we give the D compiler system away for free! You don't have to be concerned about being taxed on it.
If its value grows beyond the value the business originally invested to acquire it, it is quite literally a capital gain.
Why do you think Anthropic is worth $175-$350bn? Where did that capital value come from?
However the thread revolves around employers replacing employees with AI. Given that the number of AI creators is minimal, and the number of companies replacing employees is large, it follows that most companies replacing employees are renting AI, they did not create it.
Hence, for those companies, AI is not an asset, it is an expense.
One way of taxing those companies would be to tax AI producers based on revenue, not profits. If 50% of revenue was tax, then, the costs of AI to the end-user would go up to cover that. So revenue would "double", but half would go to govt.
I am not a tax lawyer though, but I expect such a scheme is so radically different to the current tax regime, that is has precisely zero chance of being implemented like this.
Why?
Taxing the profit of AI companies is useless since profit is a number that is easily manipulated to 0. Taxing revenue is much more direct. Prices have to go up to cover the tax. Hence the consumer oays "more" and that more is passed onto the tax man.
Taxing profit is exactly why businesses pay so little tax - it's trivial to make "no profit". (For example if the IP is held in another jurisdiction with a lower tax rate, and is "licensed" by the company which wants to make no profit. )
What is it capable of generating in real profits? Yet to be seen.
chatGPT is a sypcophant and without regulation any AI company can and or will juice their algorithms so their AI system becomes cocaine for the millions of lonely to unsatisfied people out there.
My friend has a partner of 30 years but their relationship is that of roommates. If you think she is not you that might be correct but you know someone like her and possibly many like her. Unsatisfied, not able to get that movie type love / romance / fantasy and now unfetterd AI can get these people hooked like cocaine and into the depth of zero reality!
That is...literally the point of government...
If you meant, that something shouldn't be banned just because it is dangerous, most people would agree with you. But almost everyone would agree that regulation of dangerous things is essential.
The preamble of the U.S. Constitution literally states that part of its purpose is to..."promote the general Welfare."
I would change my opinion if it could be shown to have the negative physical harm that your cocaine example implies.
What will the mental health of society start to look like if every person who's on the edge has a computer to tell them they're totally correct and everyone else are haters?
When AI behaves sycohphantically towards someone, it can encourage and exacerbate any mental health problems they may already be having, especially related to social isolation.
How do we get royalties on this, like our share of the oil proceeds if we were citizens of Qatar? How do we trade our share of the contribution? There's twenty years of my posting on Reddit, Slashdot, HN, and other forums, that we know for a fact has been used in these frontier models. Great... where's my royalty check?
Pay us, not the government. We'll have to pay taxes regardless, and yes, close the tax loopholes on security-based capital gains (don't tax me for all the investment in my primary residence, that's a double dip).
I heard this called "Coasian" economics (as in Coase). I'm not sure what that actually means, though.
I support the idea of UBI with zero conditions, but not this. You didn't get royalties before AI when someone was heavily influenced by your work/content and converted that into money. If you expected compensation, then you shouldn't have given away your work for free.
Almost none of the original work I've ever posted online has been "given away for free", because it was protected by copyright law that AI companies are brazenly ignoring, except where they make huge deals with megacorporations (eg openai and disney) because they do in fact know what they're doing is not fair use. That's true whether or not I posted it in a context where I expected compensation.
I just don't think the AI is doing anything differently than a human does. It "learns" and then "generates". As long as the "generates" part is actually connecting dots on its own and not just copy & pasting protected material then I don't see why we should consider it any different from when a human does it.
And really, almost nothing is original anyway. You think you wrote an original song? You didn't. You just added a thin layer over top of years of other people's layers. Music has converged over time to all sound very similar (same instruments, same rhythms, same notes, same scales, same chords, same progressions, same vocal techniques, and so on). If you had never heard music before and tried to write a truly original song, you can bet that it would not sound anything like any of the music we listen to today.
Coding, art, writing...really any creative endeavor, for the most part works the same way.
I don't think royalties make sense either, but we could at least mandate some arrangement where the resulting model must be open. Or you can keep it closed for a while, but there's a tax on that.
now, there is an oligarchy coming to compile all of that community to then serve it at a paid cost. what used to be free with some search, now is not and the government of the people is allowing no choice by the people (in any capacity).
once capital comes for things at scale (with the full backing of the government), and they monetize that and treat it as "their own" i would consider that plagiarism.
how can we be expected to pay taxes on every microtransaction, when we get nothing for equally traceable contributions to the new machine?
Says who? I mean what if black artists said they gave blues to black people, and white people making rock'n'roll? Black people spent money in black communities, now it's white people making it and spending it in theirs.
In essence they are the same point about outflows of value from the originating community. How you define a community, and what is integral is subjective.
I'm not convinced either way, but this line of reasoning feels dangerous.
I'd rather say that all ownership is communal, and as a community we allow people to retain some value to enable and encourage them further.
And no, taxes don't just magically benefit everyone. It's actually the point of them, that they are redistributive.
Taxes fund the state. The state provides a minimum set of services - law and order, border security, fire safety - to everyone regardless of ability to pay. That others may derive additional state benefits is beside the point. Everyone gets something.
(We in some way, in the developed world, are already mostly here in that the lifestyle of even a well-off person of a thousand years ago is almost entirely supported by machines and such; less than 10% of labor is in farming. What did we do? Created more work (and some would say much busy-work).)
It is awful for the extractive economy as employees are no longer desperate.
Here’s a discussion with a historian who has done a lot of research on the topic https://www.reddit.com/r/IAmA/comments/8de9u2/i_am_a_histori...
https://knowledge.insead.edu/economics-finance/universal-bas...
With some exceptions, UBI generally doesn't seem to work.
> While the Ontario’s Basic Income experiment was hardly the only one of its kind, it was the largest government-run experiment. It was also one of the few to be originally designed as a randomised clinical trial. Using administrative records, interviews and measures collected directly from participants, the pilot evaluation team was mandated to consider changes in participants’ food security, stress and anxiety, mental health, health and healthcare usage, housing stability, education and training, as well as employment and labour market participation. The results of the experiment were to be made public in 2020.
> However, in July 2018, the incoming government announced the cancellation of the pilot programme, with final payments to be made in March 2019. The newly elected legislators said that the programme was “a disincentive to get people back on track” and that they had heard from ministry staff that it did not help people become “independent contributors to the economy”. The move was decried by others as premature. Programme recipients asked the court to overturn the cancellation but were unsuccessful.
So according to the article, a new government decided to stop the experiment not based on the collected data, but on their political position and vibes. Is there any further failure described in the article?
Alaska as a state managed to do just that and more or less has an annual UBI.
Payment for content access is a sure way to limit progress and freedom. Should I pay you based on quantity, quality, or usage that relates to your content? How about the ideas you took from other people, should you pay them? Where does it stop?
I think the copyright system as it exists today is just absurd - a complete inversion of what it was supposed to do. It was meant to promote progress by protecting expression. Now look at what's happened: total concept and feel protects aesthetic gestalt, Structure and Srrangement protects how elements relate, Whelan Test protects the entire logical skeleton while AFC (abstraction filtration comparison) enables hierarchical abstraction protection.
Each rung up the ladder takes us further from "I wrote this specific thing" toward "nobody else can solve this problem in similar ways". This is how platforms get rich while common people, readers and creators, lose their freedoms and are exploited.
Certainly you can argue income inequality is too high and capital holders and high earners need to pay much more.
But you cannot seriously argue that capital owners "avoid contributing to the financing of our states and social systems". They pay a lot in capital gains and income taxes, even if they don't contribute as much as they should.
Receiving a relatively low official salary (Bezos's Amazon salary was $81,840 for many years).
Not receiving dividends, so the wealth remains in stock that is not taxed annually.
Borrowing money against their stock holdings to fund their lifestyle. Loans are not considered income and are therefore not taxable, and the interest on the loans can sometimes be used as a deduction.
A loan should definitely be a taxable event and capital gains taxes should apply to rebase the value of the stock to the market value at the time the loan is taken out. Currently, very wealthy people use the loan dodge to avoid selling stocks and since the loan isn't paid off until death (usually), estate taxes wave their hands and any gains in the stock price go away, so that the next nepo generation gets to repeat the same dodge.
Right, but you're ignoring the loop-hole OP mentioned where you borrow un-taxed money then deduct it. Kill the loop holes.
So the only way to pay less tax is to surrender all your assets.
[1] https://www.fidelity.com/learning-center/life-events/cost-ba...
Sure we can. Peter Thiel managed to put $5 billion in his Roth IRA.
https://www.propublica.org/article/billionaires-tax-avoidanc...
"Using stock deals unavailable to most people, Thiel has taken a retirement account worth less than $2,000 in 1999 and spun it into a $5 billion windfall... What’s more, as long as Thiel waits to withdraw his money until April 2027, when he is six months shy of his 60th birthday, he will never have to pay a penny of tax on those billions."
This is exactly the kind of thing I was looking for.
> In the United States, for example, about 85% of federal tax revenue comes from labor income,
That means only 15% is coming from all other taxes, including corporate taxes, capital gains taxes, and other taxes on the wealthy (estate taxes), mostly because they find creative ways -- and loopholes by design -- that allow them to reduce those taxes significantly.
Making capital gains taxes more progressive is a good first step.
If billionaires (soon to be trillionaries) paid as much taxes as their wealth disparity compared to the middle class, a significant percent of the population would be exempt from taxes by the sheer insignificance of their contribution, and I don't mean only the poorest people.
(Plus, one of the tricks employed is to avoid earning actual taxable money. Steve Jobs famously had a $1 salary; folks like Musk now just borrow against their ever-rising shares. https://www.propublica.org/article/the-secret-irs-files-trov...)
> But take out a loan, and these days you’ll pay a single-digit interest rate and no tax; since loans must be paid back, the IRS doesn’t consider them income. Banks typically require collateral, but the wealthy have plenty of that.
starting your reply with an insult, great way to spark "grown up discussion"
Can we have an honest discussion that uses numbers instead of hyperbole?
Notably, that still seems pretty insulting to me. jimbokun wants to have an honest discussion about the problem, using true data instead of emotional exaggeration. This is a reasonable thing to ask IMO, but of course it seems like an insult towards the person that's making stuff up.
Why should workers care about being more productive if they do not reap the rewards in terms of wages?
https://en.wikipedia.org/wiki/Decoupling_of_wages_from_produ...
If AI does begin to really crater the job market, only owners of AI (yes including shareholders) will benefit but most folks do not own stock - or at least do not own any significant amount of stock.
Workers do not benefit in increased compensation of any sort when AI increases company productivity.
Obviously I don't seriously believe we should depress productivity so that nurses make less money and hospital stays are cheaper. But, you know, it doesn't make it untrue.
World Economic Forum: https://www.weforum.org/stories/2020/11/productivity-workfor...
Compare like to like. Mean productivity increase tracks mean wage increase super well, same for median productivity increase vs median wage increase.
Avoiding tax through various loopholes that Capital gets a seat at the table to help craft, while benefitting from externalizing the costs to taxing labor is just corruption.
Tax is one of those issues where there are actually correct and incorrect answers, thanks to many hundreds of years of active experimentation and relatively simple/robust theory. But people ignore the correct answers for social reasons.
The correct answer on tax is:
1. Figure out how much money the state needs to supply the services that are in-scope for it to an acceptable level of quality.
2. Aim to raise that much in taxes.
3. Optimize deadweight costs. That is, configure taxes to minimize the level to which the activities being taxed are discouraged and driven either out of existence or abroad.
If you do this sort of thing then you get Georgeism, you get zero capital gains, I think you get zero taxes on businesses, and a bunch of other policies I can't remember right now. The results can be economically very efficient i.e. they make everyone better off. However, almost nowhere uses them because there's nothing in the above three items about social engineering, and governments use taxation largely as a tool of social engineering. And in particular to please leftist voters who use the tax system to penalize wealth for its own sake, and to reward groups of client voters. Many governments also have a lot of trouble defining what's in scope for them and then working backwards to needed tax revenues; they prefer to raise as much tax as they can manage without totally crushing their economies and then find ways to spend it.
Switzerland is a bad example because they tax capital more directly. In the form of a wealth tax. https://en.wikipedia.org/wiki/Taxation_in_Switzerland#Wealth...
GP said setting taxes on capital to zero was a bad idea. Switzerland has only set capital gains taxes to zero. It still taxes capital.
The type of tax matters a lot. The reason capital gains taxes are bad is that they discourage investment, but investment is how you create wealth. "Creating wealth" is ultimately a synonym for creating material progress. Voters like progress, and so this is a very simple and direct argument, which is why most countries that have capital gains tax it at a lower rate than income. Wealth taxes have different incidence and change incentives in different ways. Basically, they discourage having wealth rather than creating it.
It can create its own problems. Switzerland has had big problems in the past with the wealth tax discouraging the creation of tech startups. The reason is that if you create a company then sell some equity in it to investors, that creates a valuation of your company which is then considered wealth, even though it's theoretical wealth and not liquid. In other words, doing a big VC raise can land the company founders with an unpayably massive tax bill: they literally don't have the money to send the government because it's only paper wealth.
To fix that the Swiss tax authorities had to introduce a new rule that says if you have ownership of a startup, this doesn't count towards the wealth tax. What exactly is a "startup" and what differentiates it from other kinds of business? Whether it is "innovative". What counts as innovative? The taxman decides. That means creating a startup in Switzerland is quite risky as if some random bureaucrat decides your product isn't truly innovative and you do a big VC raise you could be personally bankrupted (or you have to use some of the investors money to pay yourself out each year, which is then taxed as income too pushing you into a much higher tax bracket, etc). There are lots of other practical problems with the wealth tax.
Tax incidence is complicated!
In practice the Swiss approach works because:
- The wealth tax is quite low
- This "innovative startup" hack seems to work out in practice even if it's concerning in theory (tech startups aren't the only way to create a lot of wealth)
- Wealth taxes discourage all kinds of wealth equally, so the effects are diffuse and they don't specifically discourage e.g. getting promoted over company formation over inheritances, which is a distortion a lot of other approaches do create.
airstrike: zero taxes on capital are a bad idea
mike_hearn: Switzerland has no capital gains taxes and it's great.
triceratops: Ok but it still taxes capital.
mike_hearn: I live in Switzerland. No capital gains taxes are great and everywhere other than Switzerland has a lower tax rate for them than income because we want more capital gains. Also wealth taxes can cause startup founders to be taxed heavily.
There's a bit of a disconnect here. You're arguing against multiple strawmen IMO.
Outside Switzerland the current situation is: regular people pay high income taxes while they work, then somewhat lower capital gains taxes in retirement. Ultrawealthy people pay far less of both because they have ways to avoid them (keep employment income low, borrow against wealth instead of selling it).
In Switzerland, since the wealth is straight up taxed, even if at a lower rate (I ran the Swiss wealth tax numbers myself a while ago and you're right it really is a very small amount. I pay way more in capital gains taxes) there are fewer games. Everyone pays taxes on what they make or own.
The startup wealth tax problem has another solution: allow payment in non-voting startup shares, instead of liquid cash. The shares go into a sovereign wealth fund. The government either reaps a windfall eventually alongside the founder, or it misses out on tax revenue it shouldn't have collected anyway (if you look at it from the fairness point of view).
> The startup wealth tax problem has another solution: allow payment in non-voting startup shares, instead of liquid cash
This is an excellent idea! Did you come up with this yourself or have you heard of others proposing it?
I don't think it's a particularly revolutionary idea because sovereign wealth funds already exist. Improving productivity means using less labor which means lower income tax revenues as time goes on (and that's what you want - higher productivity, fewer labor inputs).
And yet, the government needs revenue. What's growing? Wealth. Liquidating wealth to pay taxes is problematic. Hence the sovereign wealth fund. You can apply this to most forms of wealth - even publicly traded stock, real estate, crypto, and artwork.
I've proposed it on this site several times in the past.
The shares are illiquid and that poses a problem for the taxpayer because the government only accepts cash. If instead they could sign over an equivalent number of shares then morally (and arithmetically), they've paid what they owed.
The government may subsequently choose to dispose of the shares on a secondary market, if one is available. Or it may hold on to the shares until there's a liquid, public market for them. Or it may never sell. It all depends on how the sovereign wealth fund is managed and structured. Way smarter and more knowledgeable people than me would have to design how the fund actually works and prevent market manipulation and insider trading.
The argument for low capital tax is that if it's high, the people with the capital - who, crucially, need someone else to use it to make money from it - will just hoard it. For one thing, the obvious glaring issue with it is that however high the capital gains tax is, so long as the owner of capital in question still gets to pocket some of the wealth produced using it, they still have an incentive to continue - something is better than nothing. The actual, real world threat is that some other jurisdiction sets the tax rate lower than you will, and capital will then move there. But this same threat applies to many other taxes, capital gains aren't special in that regard.
When people talk about wealth creation they mean the creation of new wealth. Filling potholes isn't normally described as wealth creation because it's sustaining activity. You can choose to define wealth creation differently, that's fine, but it makes the term useless because it'd become synonymous with any kind of work.
Additionally, there's no real world difference between investors and workers. The idea you can separate capital as a class of people from workers is a Marxist concept that doesn't make any sense outside that broken ideological framework. The classical example: if someone owns a food stall, are they capital or a worker? If they pick up that stall and cart it to a bigger town down the road, is the act of them hauling their cart along the road work or an investment? You could argue equally well both ways, which makes the distinction just a distraction.
> however high the capital gains tax is so long as the owner of capital in question still gets to pocket some of the wealth produced using it, they still have an incentive to continue
Not at all! This is the kind of weird prediction that false distinctions between capitalists vs workers causes. It's why Marxist economies always fail. Investment is work and it also requires taking a lot of risk. If you confiscate 99% of someone's ROI nobody is going to say oh well, at least I got 1%. They're going to give up investing at all because the act of making the investment not only took effort, but also meant they could have lost the whole shebang.
I feel like you have only a cursory understanding of finance, economics, and taxation. If you didn't, you would't ask questions such as
if someone owns a food stall, are they capital or a worker?
It reads like you're trying to find evidence that reinforces your priors while dismissing whole swaths of empirical and theoretical work that would immediately challenge it.
For context, I spent a decade as an M&A banker, so as far from a Marxist as one can be.
If last year I had wealth X and this year I have wealth X+Y, I have to pay a wealth tax on the gains, in addition to the the tax on the amount I had previously.
So my gains are still taxed.
- Wealth tax is much lower, think a percent of your wealth or less vs 20% of your gains.
- You can avoid wealth tax by spending. If you sell a bunch of shares to earn $100k then take a year off to see the world, you pay no tax on that (other than sales taxes etc).
- In practice a lot of things aren't covered by wealth tax. If you spend on a fancy new TV it's not measured. Only the big ticket items are wealth taxed (houses, financial assets, art, cash piles, etc).
It's unclear that the model can be replicated generally, let alone whether it should. Importantly, there may not be sufficient demand for banking services like the Swiss provide.
Your three step plan says nothing about how much should be taxed at the personal vs corporate income level, or on the gap between capital gains and labor income taxes.
I'm not arguing for higher tax revenue overall. I don't believe in that, but I also wouldn't even need to make the argument even if I believed in it.
The simpler, more defensible argument is that taxes on capital gains must be much closer to income taxes. Historically they were, even in the US, and we seemed to be fine.
Meanwhile, financial privacy isn't inherently questionable. The USA did a big push in the 1970s to strip privacy from the financial system which until that point had been the default. That was the birth of the concept of money laundering, created as part of the war on drugs. The approach failed as drug cartels found ways to launder money cheaply enough that it wasn't a big friction for them (normal estimate, it adds ~10% to their costs). Not everyone thought that was a great tradeoff, and the Swiss numbered accounts had been used by people trying to hide from the Nazis.
At any rate, the USA forced their concept of anti-money laundering on the world (not that most countries needed the arm twisting) and Switzerland has implemented exactly the same policies as everywhere else for decades. It has no special rules with respect to banking for a long time now.
> Your three step plan says nothing about how much should be taxed at the personal vs corporate income level
It's a set of principles for answering those questions, not the full set of answers.
It's been years since I looked at this but IIRC the general agreement is that you shouldn't bother with corporate/business taxes, because they're both an indirect/inefficient way to collect tax (all taxes are paid by people in the end), and easily avoided.
It was for this reason that the designers of the EU's taxation system originally configured corporate taxation to be collected wherever the nameplate was (i.e. an arbitrary location chosen by the company). The assumption was that with time individual countries would compete the corporate tax rate to zero, fixing the underlying inefficiencies. Of course what's actually happened is some of the countries try to gang up on the others to try and force them to stop lowering taxes. It's not a stable outcome, politically.
In practice business taxes are popular because politicians view them as a way to tax citizens of foreign countries. That has bad effects too but schools either don't teach economics or don't teach it properly in most places, so there are lots of weird hacks like this where something that creates more harm than the alternative gets preferred because people can't resolve the harm to the root cause.
So in theory, LVT could collect more tax than the state needs to fund services. If that happen, it would be distributed as a Citizen's Dividend.
I am skeptical that we wouldn't be able to find a productive use for government spending, but that's a discussion for citizens of a Georgist state to have.
Also, Georgist policies would discourage the existence billionaires and other people with extreme wealth simply because a lot of their wealth came out of economic rent.
In any case, California are where some of the most powerful tech monopoly are located, and not coincidentally it's also where some of the most expensive land there is.
Economic land is anything that's fixed, finite, and not man-made, such as land, the electromagnetic spectrum, and orbitals.
Services like amazon and instagram are something of a puzzle to Georgists, but it's at least clear that Amazon and instagram benefits from labor and effort of the platform users. Without people selling on Amazon, there's no amazon. Without users, there's no reasons to be on instagram. To be perfectly clear, platform companies obviously put in labor to build their services, but the network effect isn't entirely of their own making.
You're welcome to make your substantive points thoughtfully.
A lot of the debate on this topic is tedious anyway because it revolves around semantic distinctions that only exist in specific kinds of ideological discourse.
Point one: higher productivity is not necessarily our goal. I could think of numerous industries that would make the world better if they did less work.
Point two: There's a moral absurdity in taxing the wages earned by labor more heavily than the returns earned by ownership. One is tangible effort, the other is an abstraction backed by law. If anything, taxing capital should be the baseline, because it's the least tied to survival. Historically, when America was at its most broadly prosperous, capital gains and corporate profits were taxed at far higher rates than today.
Point three: AI intensifies that calculus. If AI is deployed by capital to further replace or devalue labor, then taxing only the worker is punishing the displaced while rewarding the displacer. That's pure extraction. If we want social systems to survive, the burden has to fall on the owners of the machines, not the people being replaced by them.
Genuinely one of the largest and most destructive ills of our society right now is that so tremendously more of our shared prosperity as a system is directed to those who do the least to create it.
So, what do you tax? You tax land and land-like things, non-reproducible privileges(like patents and copyright), pollution and other negative externality.
Now, there's an argument to be made that we couldn't possibly be able to fund governments on the back of these taxes. Fair enough, but it should mean we minimize those taxes until the economy grows enough to fund government services.
This assumes the worker is the one benefiting from the productivity gains. We're just worked more and we don't get the added value.
Are you sure capital owners do not contribute to our states and financial systems?
For instance, Jeff Bezos is worth $238 billion even though Amazon has a $2.6 trillion market cap. That's $2.4 trillion of value created for other shareholders plus trillions more for employees, customers, suppliers, governments, and other stakeholders.
Jensen Huang is worth $164 billion while NVIDIA’s market cap is $5 trillion. That’s $4.8 trillion of value for other people (ignoring value created for non-equity stakeholders).
etc.
I'm not saying that there should not ALSO be other ways to force contribution (e.g. via taxes), but to say they do not contribute at all is false.
1. Value created for other shareholders is a good thing
2. $ "value" directly translates to actual resources or services
3. These employees and customers would not get the same or more value elsewhere if Amazon did not exist
4. This "value" created by Amazon is better compared to the alternative (such as more resources used locally instead of global trade)
What is the logic?
It's not a given that this will remain true forever, although I don't think it's tied to AGI. One could argue that AGI push is the trigger for a massive increase in compute capacity and corresponding decrease in price that might make this kind of thing viable, but that's just wishful thinking, not a fact.
The poster is suggesting there is some _true_ value separate from what these customers who know their own situations best think. That they are secretly being fleeced and a central planner will somehow better allocate the resources.
Not at all. What if it were an employee co-op?
"The ultra-wealthy should have less power" != "We should implement a five-year plan for our command economy as thought up by glorious and correct Party."
Not generally. Window repairmen get higher incomes, but the rest of the economy has less consumption and investment.
I don't believe that's true. I believe that's called the "Broken Window Fallacy" in Economics.
Folks that own a vast amount of stock do not pay taxes on that stock. They own the shares, and they take out loans against those shares. At some point they rollover or pay off those loans by selling some shares, but the shares have increased in value significantly in that time, or they’ve been granted new shares.
When we say “<business> has created value for shareholders”, it’s said in a way that implies that somehow that wealth creation makes its way into the tax system by virtue of the fact the wealth was ‘created’. It does not.
This is all aside from the fact that increased shareholder value means a more abundance society regardless of the increase in taxes. We could quibble over the exact distribution of who gains from the enlarged pie but it's certainly not the case the 100% of it goes to capitalists so consumers and employees also benefit.
Almost no one in the US pays the estate tax. It only applies to estates over $14MM and most large estates get reorganized into trusts with estate tax avoidance as a primary motive.
That's not Bezos' doing alone, that's Bezos plus over a million workers that did that. If Bezos never existed in history, someone else would have filled in that market. We need to stop this myth that a few men alone create all this value and that without them we'd still be dragging plows through the mud for our farms.
On the other side, Jeff Bezos is clearly an outlier. Even if we agree that ecommerce would have existed without him, we don’t know whether someone else would have created the same scale of value.
I think it's pretty clear Amazon is quite a positive given by how many people like using it so much for it's convenient 1-stop shop, quick shipping, and hassle-free return process.
Are you saying it would be better to have to shop at 1000 different little websites with probably crappy or at least inconsistent return processes?
There is such a wide variety of products that people go to Amazon for. I know I do. So many things are niche I can't see how any local stores could exist to stock things like that in even a 1 hour range from a majority of the population.
How many people are going to drive hours to go to a special boutique that has this random thing they want or need?
Maybe people use Amazon to buy routine things that could easily be stocked locally. But I guess I use Amazon to get things that I can't really get or even usually find anywhere else for that matter. Most come from small operations using Amazon as their sales platform. Amazon is providing a lot of discoverability and logistics to them and I am not sure I would even stumble across the seller if I had to find some tiny website that they operated themselves.
I am not sure most people would prefer to shop locally, most people don't seem to even go to the store anymore and instead use delivery services for everything. This saves so much time to allow us to do other things that we enjoy in our lives. I don't think small shops would be able to offer this level of convenience.
Are you serious? I live in country where we are not using Amazon.
And if not, you are saying you have a similar availability of such a vast network of goods, almost anything you might want and the convenience of fast delivery and simple returns via local shops or something?
I guess I’m not sure what you are suggesting. I personally find that shopping and finding and acquiring the products I want is vastly more convenient and easier with Amazon than before we had Amazon and yes I was around back then too. I’d never want to go back personally. Most family and friend I know seem to feel the same.
It’s the same pattern everywhere around the world (perhaps there are a few exceptions). Businesses can be much more creative with tax evasion as well.
Businesses don't pay taxes. People do. Every dime that a corporation pays is a reduction of capital returns to shareholders, or a reduction of investment into business activity, both of which are taxed again by the people who ultimately receive the capital.
When inflation is absurdly high like in Argentina, Economy does not make sense any more.
Basic economic assumption are not true and you get things like that or that "spending" is actually "saving".
I don't think it relates.
The industrial era problem isn't capital but that economies of scale encourage consolidation heavily and make running small business an even more uphill battle. There is at least a counterbalancing force of competitive pressure and antitrust to promote some splitting for innovation's sake as opposed to just one big stagnant monopoly winning out just because it is biggest.
40% figure is also based on individual income taxes. It drops significantly if you consider other sources (payroll etc).
Top 1% also receive preferential tax treatment and benefits disproportionately from policy changes.
[1] https://www.cbsnews.com/news/income-taxes-billionaire-tax-ra...
[2] https://www.propublica.org/article/the-secret-irs-files-trov...
Another fundamental problem is that the means of production are concentrated into the hands of a few.
I am more worried about the capability of people to use the free means of production (more precisely improve education) rather than the concentration.
Edit: and to remove any doubt, I do agree that taxation of capital is completely badly done now, but I do not think the capital is about owning the means of production but about the capital (effort) required to organize people to use the (mostly) free means of production.
The top 1% pay 40% of the Federal income tax.
And so you can easily turn that argument around: the workers who actually produce the useful things are, for some reason, taxed higher than the owner who didn't lift a finger to produce anything, but is entitled to all the profits by virtue of being the capital owner.
Capitalism works when a market works; capitalism fails when a market fails. Healthcare is a great example, because there’s an obvious and inherent imbalance in demand vs supply. Firefighting is another great example. These also have externalities to the community as a whole that everyone gets, even when you don’t pay/need the service; so it makes sense to make everyone pay (taxes). Even if you never have a child, even if you send your kids to private school, you live in a society that could only exist because of a (formerly, relatively) high standard of public education. So everyone pays for schools.
The idea of government bureaucrats lining their pockets is also (formerly, relatively) ridiculous: who would get into US government bureaucracy to make money? They are all (formerly, relatively) doing it almost uniformly because they believe in the mission, because they would almost all make more money going private.
Debasement is an invisible tax and its effects far outweigh individuals bypassing taxes.
This thread is about the fair taxation of AI, if any.
> capital owners successfully avoid contributing to the financing of our states and social system
Are you talking about taxing unrealized capital gains?
Because for the situation where capital is directly replacing labor, the income generation is taxed regardless of the whether it’s generated by a human or machine.
If I hire people to make and sell hot dogs, they pay taxes on their wages. If I build an automated hot dog vending machine, I still pay taxes on the profits of selling those same hot dogs.
One can’t spend any of the money until it becomes personal assets. So what is not being taxed?
If I keep them in the company, I pay corporate tax on profits (22%) for retained earnings. And then I’d have to pay dividend tax (either 15% or 20%) atop those retained earnings to pay them out to myself as income. Or I pay myself a salary and pay regular income tax on the full amount.
Due to our progressive tax brackets and double taxation of dividends, both options end up with larger tax rates than when dealing purely with low wage human labor. We as a society collect more in taxes from one high income earner than multiple low income ones.
The oldest trick in the book is to use unrealized gains as collateral for loans - we even have banks specializing in this.
Oh, and the US has a law that erases the tax bill for dead people - you'd be stupid not to use this trick.
That is true, but there is a theory, applied very weakly, that supports this. The idea is that a decedent's estate is subject to a wealth tax on its fair market value, therefore to also subject the unrealized gains within the estate to income tax would be double taxation, which is to be avoided. The flaw is that the exemption from the estate tax is relatively high (something like $13,000K), so there would not be any double taxation is most cases, but it's treated that way nonetheless.
One inherits free money - and pay inheritance tax of it. In order for capital to be free, capital gains tax needs to be paid.
And the general idea to protect against "double taxation" is meaningless. All money are constantly being taxed again and again.
Regardless. Inequality in itself is really bad, and Americans do feel the consequences.
so the answer is yes.
However, i did not go as far as proposing anything. You are assigning value on my statement.
I merely pointed out that it is a mute point to say that you can not use your unrealized gains.
You know, exactly that span of time that everyone agrees on being really prosperous.
Tax not paid by ultra wealthy goes back into he system as loans that extract interest that in turn is used to buy assets sold to pay for interest, those are then rented back to the system to extract more interest.
In essence by allowing no tax to be paid by the ultra wealthy, we facilitate the death of the middle class and transfer of everything to the very few - with mathematical precision.
Ultimately we need to ask ourselves why we have a society, what's it's purpose.
For the few or the many ?
Considering this, everybody might have to make (at some point in their lives) hard choices regarding where they choose to live. Yes, one should fight to improve the society one is living in, but there is also a saying "only the fool persists in their folly" ...
One can imagine a world where productivity increases, the need for old jobs is reduced, but newer, better jobs more than replace them because the economy is experiencing genuine growth. Self-serving capital rhetoric will push you to always imagine it this way, self-serving labor rhetoric will push you to never imagine it this way, but good policy lies in figuring out what's actually happening in aggregate and responding accordingly (the framing I tried to push).
Farmers using machinery instead of labor has meant cheaper food for everyone, not rich farmers.
I think that if we look at inflation-adjusted productivity, and inflation-adjusted average income, then that would indeed prove increasing inequality, right?
I believe the chart in this link is adjusted by inflation. Showing overall the same trend:
When your argument boils down to discussing fantasies in a fantasy world, you have a bright future as an economist indeed.
Because that increase in productivity comes almost entirely from technology owned by your employer.
To look at it in a contrived example, let's take textiles. There is a textile factory employing weavers who weave fabric by hand, and the factory owners buys a new automated weaving machine that makes the weavers each 3 times more productive. The maker of the machine created the technology, and is paid for it, the owner of the factory made the investment to bring the technology, and profits from it.
This is basically exactly what has happened to modern productivity.
I'd argue the same goes for many types of digital creators, artists, video editors, animators, and so forth.
Not really. That's essentially a weaver learning to use the new automated weaving machine. That is what you do to remain qualified for the job. Now, if you were a framework or key system creator, building the underlying platforms that get adopted throughout the industry, I would agree. But just learning to use the tooling the the industry creates isn't that different, other than the rate of change you have to keep up with.
An automatic weaving machine, operated by a capable operator, produces 3 times as much as a manual weaver. The productivity increase is the machine, not the operator. That's my entire point.
The owner of the machine reaps the surplus, not its operator.
> This is the problem of the decoupling of productivity and wages. It started happening at precisely the moment the gold standard was ended - weird.
You'll get no argument from me about the ills caused by the financialization of the economy, but I don't think that's what's going on here.
Productivity increases result in lower prices in any competitive market.
By itself it wouldn't be a problem, the problem is at the same time they raise taxes for people doing OK, and salaries are mostly stagnating.
But, of course, in such a society, the people who don't own the robots - i.e. most of us - become "economically unnecessary".
Of course, the question then is who is consuming the production, but we're not quite there yet.
So you are effectively suggesting to forcibly take their money from them and then give it back, but through a corrupt and bureaucratic system of the state.
So the government is going to fix this, right? Right...?
The current interest on our national debt is greater than our military spending.
So if you increase taxes some people think it would just be throwing it into the money fire of Washington.
There needs to be a lot of changes in D.C.: term limits in congress, citizens united needs to be repealed, erc etc
For quite some time, my mortgage interest was larger than my principal.
That didn’t make it fiscally irresponsible.
https://www.marketplace.org/story/2025/07/14/how-our-debt-cr...
During Clintons term this turned around to being a 2.3% surplus in 2000. Just 25 years ago the US was spending less than it was taking in tax.
The Bush came in and that surplus became a 3.3% deficit by 2003, and then the GFC crashed it to 9.8%.
While Obama was in, it crawled back from 9.8% deficit to 3.1% by 2016 - same value as before the GFC
Since then it's gone back to 6% of GDP
Even the $18B ($450/capita) vs $1.8T ($5,300/capita) looks pretty small for a state that large.
The government is fiscally irresponsible by design, because the government is ran by the plutocrats with all the incentives to give themselves more money at the cost of everyone else.
So many commnents here, yours included, make perfect sense when you simply look at them through the lens of the workers' relationship to the means of production.
Automation could be a good thing. It could mean we need to do less work and have more leisure time. Instead it gets concentrated in the hands of very few so they can become even wealthier. And the resultant layoffs are used to extract free labor from the people who remain and suppress their wages, all to eke out more profits.
As a libertarian, I find the whole requirement for workers to secure an accountant and file individual income taxes under threat of retaliation silly. Individuals should be free to engage in activities like working for an employer, taking care of their kids or aging parents, or having sex, without paying tax to the government. Taxes should be levied on companies and robots, not humans doing everyday things.
The employer knows exactly how much they are paying each employee, and they already have accountants on staff. Why create "bullshit jobs" just for employees to file this same exact information again?
So yeah, we shouldn't wait for AI to replace workers, to abolish the individual income tax for individuals. It should have been done a long time ago. Employers can pay the tax (as they do with FICA). And in fact, we're going to have to have a tax regime that taxes robots, which would become the primary economic actors soon anyway. If corporations can have legal personhood, surely robots can too LMAO.
This is also a slippery slope. As slippery as taxing individuals, property etc.
The modern rulers rely more on brainwashing and less on direct oppression for this exact reason. Not that the latter doesn't happen, mind you, but I also can't think of any modern day regime that is sustained solely by force, without some measure of popular support.
Give unto Caesar that which is his, and let God handle the rest. The base case for the inductive proof is alarming, and I can’t see it ending well.
Additionally, for the projectile velocity at the time the gambeson-like garment the Aztecs had available was surprisingly effective.
https://taxfoundation.org/data/all/federal/latest-federal-in...
How about the rich say that 50% of the economy should pay their fair share?
They don't get money through income! They get most of it through capital gains or unrealized capital gains which are taxed at special low rates and zero rates respectively.
It's transparently self-serving and completely indefensible -- though I'm sure you'll try.
What it would impact is how easily these people could influence the political system and get themselves out of trouble.
At $400 billion net worth, Elon Musk could retire one hundred thousand times. He literally wrote multi-million dollar checks to various politicians and ran an illegal pay-for-votes scheme in Pennsylvania. And he'll face zero consequences for it.
It's not like he has all that in money in his bank account, it's ownership of companies, their value is not real until someone else is willing to pay.
You have a vendetta against a guy, for grievances, some legitimate, and want the law to change, specifically to get him, because you hate what he says. You also want to nationalize his businesses, that he built, that he did not have to build, that now employ 140,000 people, that he did not have to employ, with those 140,000 people almost all being high income earners paying higher tax rates when they may not have otherwise, out of your hate.
I would call that greed and a despicable position.
On that note, it's also completely pointless. If you were to literally liquidate every billionaire in America, every single one, and somehow got current market rates for every single stock share, 100% tax rate beyond $1B... we would cover the deficit for 3 years. With everyone else still paying taxes. Then we're back to square one, running a $2T deficit every year with no billionaires to liquidate. It's entirely catharsis that accomplishes nothing. If such a tax were even passed, we wouldn't make it to the next election cycle before it's a problem again.
It would certainly impact their willingness to do the company-building that creates all those innovations and jobs.
With such a rule, Tesla wouldn't exist, no electric cars, no SpaceX, no cheap advanced launch tech; basically most of the modern world would be choked in the crib by taking away the incentive to build it.
Bottom 50% only 2% of wealth
50% of the economy my ass, these takes don't even pass basic accounting logic these days
Someone with $1b of assets gets far more value from a modern stable western society than someone with $10k of assets
How exactly do you propose that they pay their fair share when they literally do not have the money or assets to do so? Are you proposing modern day slavery? Perhaps people selling their family? I'm curious what happens if you take this line of thought to it's actual conclusion.
Maybe different depending on area, like $20,000 a year to live in NYC but only $2,000 per year to live in a rural village.
If you can't afford the fee that's OK, it just means you have to live outside of the developed areas and don't benefit from any services provided by the government. But you are free to set up a tent in the woods and live off the land.
3 years of not taking out debt, while still needing everyone else to pay current rates. Then you're back to square one. Sans billionaires and sans any major capital investment anywhere.
I don't think people should be able to vote on massive tax increase laws, if it doesn't also increase their own taxes in some way.
1% of Americans control 30% of the wealth of the nation, and apparently 12% of property.
It's more than reasonable that people with that much wealth to their name pay the vast majority of the taxes, as it used to be.
From a nation building perspective, there's no reason to allow a couple hundred people to wield 52,000,000,000,000$ worth of assets. It means the economy has gotten far too clumpy and needs some redistribution. This isn't even really all that anti-capitalist. Capitalism can't survive long term without budding up against a government that regulates it.
In any case, it seems a bit bizarre to me that the wealth is distributed so unevenly. Do you believe those 3 million people work so hard that their value is that much higher than the combined output of 297 million people?
But it's a lot nearer to someone at the 90%ile wealth of about $2m than the kind of power that those with $1b, let alone centi-billionaires, have. You're talking top level entertainers (actors, sportmen etc)
If capital holders don’t actually deploy that capital and compete with each other, then you don’t have a capitalist system anymore. You have a feudal system, where asset holders extract resources through rents, rather than capital deployment and risk taking.
When every industry is on a multi-decade streak of consolidation, when McDonalds is about land speculation rather than serving food, farming is about land ownership rather than growing food, airlines are about credit cards rather than transportation, it's not unreasonable to believe that a substantial amount of capital is being deployed towards rent-seeking rather than economically useful risk taking.
The crucial difference is between the governments actually run by the people, and the governments that claim to "represent" them.
Then it should be asked to give a part of it for free. Not necessarily money by the way.
I often ask myself whether that is ethical or not. But in the end, it’s not the tooling that’s unethical. Productivity increases are good for everyone, under normal circumstances.
It’s the fact that all the gains are being collected by the already uber-wealthy that’s wrong.
So if I'm reading your comment right, you think it would be ethical under normal circumstances, but also believe we don't live under those normal circumstances? In that case i think the answer you're looking for is: it is not ethical to develop these tools under the current circumstances.
Wouldn’t that mean that it’s unethical to work on anything that improves productivity? AI, in particular?
As long as (almost) all the benefits/wealth generated by your work is captured by the 0.1%?
Because that’s the case right now.
When the product succeeds and you get offers to exit, would you sell to the uber-wealthy? They will exploit your user's data and collect the gains.
Those are the questions you should be honestly asking yourself when considering your own ethics. What's your price?
> Three: Eliminate the corporate income tax. Completely. If companies reinvest the money into their businesses, that's good. Don't tax companies in an effort to tax rich people.
> Four: Eliminate all income and payroll taxes. All of them. For everyone. Taxes discourage whatever you're taxing, but we like income, so why tax it? Payroll taxes discourage creating jobs. Not such a good idea. Instead, impose a consumption tax, designed to be progressive to protect lower-income households.
Our fundamental problem is not that we don't tax Jeff Bezos. It's that we don't tax the people who have multiple boxes of Chinese goods coming from Amazon to their houses every day.
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).
Tractors did not cause this phenomenon because jevons paradox kicked in and induced demand rendered the problem moot, or demand eventually exceeded what mere tractors were capable of doing for agricultural productivity.
The same can probably be said for contemporary AI, but it's tough to tell right now. There's some scant indications we've scaled LLMs as far as they can go without another fundamental discovery similar to the attention paper in 2017. GPT-5 was underwhelming, and each new Claude Opus is an incremental improvement at best, still unable to execute an entire business idea from a single prompt. If we don't continue to see large leaps in capability like circa 2021-2022, then it can be argued jevons paradox will kick in here and at best LLMs will be a productivity multiplier for already experienced white collar workers - not a replacement for them.
All this being said, technological unemployment is not something that will be sudden or obvious, nor will human innovation always stay under jevons paradox, and I think policymakers need to seriously entertain taboo solutions for it sooner or later. Such as a WPA-style infrastructure project or basic income.
I already have friends experiencing technological unemployment. Programmers suddenly need backup plans. Several designers I know are changing careers. Not to mention, the voiceover artist profession will probably cease to exist besides this last batch of known voices. Writer, editor - these were dependable careers for friends, once. A friend travelled the world and did freelance copyediting for large clients.
ChatGPT was just released three years ago.
The layoffs you see now are due to offshoring disguised as AI taking over. Google, Amazon, and even Hollywood are getting in on the offshoring craze.
Yup, Claude Opus 4.5 + Claude Code feels like its teetering right on the edge of Jevon's Paradox. It can't work alone, and it needs human design and code review, if only to ensure it understands the problem and produces maintainable code. But it can build very credible drafts of entire features based on a couple of hours of planning, then I can spend a day reading closely and tweaking for quality. But the code? It's professional work, and I've worked with contractors who did a lot worse.
So right now? Opus 4.5 feels like an enormous productivity booster for existing developers (which may indirectly create unemployment or increase the demand for software enough to create jobs), but it can't work on large projects on an ongoing basis without a knowledgeable human. So it's more like a tractor than anything else: It might cause programmer unemployment, but eh, life happens.
But I can increasingly see that it would only take about one more breakthrough, and next gen AI models might make enormous categories of human intellectual labor about as obsolete as the buggy whip. If you could get a Stanford grad for a couple of dollars an hour, what would the humans actually do? (Manual labor will be replaced slower. Rod Brooks from the MIT AI Lab had a long article recently on state of robotics, and it sounds like they are still heavily handicapped by inadequate hardware: https://rodneybrooks.com/why-todays-humanoids-wont-learn-dex... )
Jevon's Paradox and comparative advantage won't protect you forever if you effectively create a "competitor species" with better price-performance across the board. That's what happened to the chimps and Homo neanderthalensis. And they didn't exactly see a lot of economic benefits from the rise of Homo sapiens, you know?
Just take one long look at the kind of utter garbage human mind has to work with. It's a frame that, without a hideous amount of wetware doing data processing, can't even keep its own limbs tracked - because proprioreception is made of wet meat noise and integration error. Smartphones in 2010 shipped with better IMUs, and today's smartphones ship with better cameras.
Modern robot frames just have a different set of tradeoffs from the human body. They're well into "good enough" overall. But we are yet to make a general purpose AI that would be able to do "universal robot" things. We can't even do it in a sim with perfect sensors and actuators.
His hardware argument is primarily sensory. Specifically, current generation robots, no matter how clever they might be, have a physical sensorium that's incredibly impoverished, about on par with a human with severe frostbite. Even if you try to use humans as teleoperators, it's incredibly awkward and frustrating, and they have to massively over-rely on vision. And fine-detail manual dexterity is hopeless. When you can see someone teleoperate a robot and knit a patterned hat, or even detach two stuck Lego bricks, then robots will have the sensors needed for human-level dexterity.
AI is just the other pincer that will finish the kill shot.
I think GP's argument makes a pretty strong case that it won't, even if AI somehow successfully automates 99% of all currently existing tasks. We automated away 99% of jobs once during the agricultural revolution and it didn't result in "a broad, durable, and lasting unemployment effect" then. Quite the opposite in fact.
Maybe if AI actually automates 100% of everything then we'll need to think about this more. But that seems unlikely to happen anytime in the foreseeable future given the current trajectory of the technology. (Even 50% seems unlikely.)
The same can't even be said for contemporary AI, because lots of the jobs it's going to replace are theoretical or hype. Self-driving cars should've been here years ago, but because AI is extremely hard to improve upon once it gets to a certain level of efficacy, they haven't happened.
The question is: should we be discussing this stuff when AI hasn't started taking all those jobs yet?
In many of these discussions that line seems to get blurred and I start to get the impression people are using the specter of a vague, poorly understood hypothetical future problem to argue for concrete societal changes now.
If your way of evaluating the progress of AI is a binary one, then you'll see no progress at all until suddenly it passes that bar.
But seeing that we do have incremental improvements on essentially all evals (and my own experience), even if it takes another decade we should be planning for it now. Even if it does require an entirely fundamental breakthrough like the attention paper, given the amount of researchers working on it, and capital devoted to it, I wouldn't put any money against such a breakthrough arriving before long.
The NBA has an incredibly high demand for 14-foot-tall basketball players, but none have shown up to apply. Similarly, if this causes our economy to increase demand for people to "execute an entire business ide from a single prompt", it does not mean unemployment can be alleviated by moving all the jobless into roles like that.
We don't need science fiction AI that will put everyone out of work for it to be ruinous. We only need half-assed AI good enough that they don't want to pay a burgerflipper to flip burgers anymore, and it'll all go to hell.
Isn't ending all those programs one of the core ideas of universal basic income? Instead of having a huge bureaucracy administering targeted social welfare you cut all the overhead and just pay everyone enough to exist, regardless of whether you actually need it. It'd still be more expensive, but giving people something dependable to fall back on would hopefully increase innovation and entrepreneurship, offsetting some of the costs
Can we stop pretending with the word "fair"? If you want to squeeze out more money then you do it by force. It's not "fair". It's just "we can do this".
They report no improvements on any measured outcome. Not lower stress, not more education, not better health. They work a bit less but that doesn't help them or their kids.
Over the long term it harms them because their productive skills, values, and emotional capacities atrophy away from lack of use.
That's extremely interesting, can you link such studies?
https://yle.fi/a/3-11337944 https://www.helsinki.fi/en/news/fair-society/universal-basic...
so basic income caused more happiness, less stress. but those are not profitable things, so, no basic income in finland.
You could ban it and then turn all existing employment into a makework jobs program, but this doesn’t seem sustainable: work you know is pointless is just as psychically corrosive, and in any event companies will just leave for less-regulated shores where AI is allowed.
Yes, but not for the reasons you state. It harms them because we have an zero desire as a society to effectively combat inflation, which negates any benefits we can give people who receive the basic income.
The powers-that-be don't take action to make sure the people who get basic income can actually use it to improve their lives. Food prices rapidly inflate, education costs skyrocket, medical costs increase exponentially almost overnight.
Much like how the government backstopping student loans basically got university costs to jump, promising to give people a basic income while not addressing the root causes of inequality and wealth disparity just makes things worse.
If you want basic income to truly work, you have to engage in some activities in the short term that are inherently un-capitalistic, although if done correctly, actually improve capitalism as a whole for society. Price controls and freezes, slashing executive pay, increasing taxes on the wealthiest, etc.
My grandmother was born in 1924 and died in 2019 please appreciate how much change she had to adapt to over that period
She never learned how to type on a keyboard so you do the math
What you’re not counting is all of the millions of people who died because they couldn’t actually adapt to the new world
Which is fine but they didn’t need to be killed, they just became irrelevant and went away
On old people who can't or don't work.
If there is a magnitude increase in compute (TPUs, NPUs, etc) over the next 3-5 years then even marginal increases in LLM usability will take white collar jobs.
If there is an exponential increase in power (fusion) and compute (quantum) combined with improvements in robotics and you're in the territory where humans can entirely be replaced in all industries (blue collar, white collar, doctors, lawyers, etc).
In French we say "With "ifs" you can put Paris in a bottle."
Ex-farmhands had time to move into new jobs created by the Industrial Revolution, and it took decades. People also moved into knowledge work. What happens when AI takes all those jobs in far less time, with no other industries to offer employment?
If AI makes a few people trillionaires while hollowing out the middle class, how do we keep the lights on?
Tax the thing you care about? You don't need to care really about the definition of AI or what an AI is or anything like that, you care that some people got trillions.
Tax "making an absolute shitton of money" or "being worth an insane amount". Taxing AI specifically means you're absolutely fucked if Altman turns out to not earn that much but someone who makes a specific connector to data centres is the richest person in the world. Is Nvidia an AI company? What is AI? *Who cares?* The point is to figure out some way as a society of continuing.
> Tractors largely replaced human labour in farming about a hundred years ago
And what happened around that time? yeah it wasn't a period of smooth calmness was it? Periods of massive changes in productivity (ie lots of people going into unemployment) causes huge societal changes.
The thing that staved off revolution in the US was lots of spending, banking regulations, federal reserve, new deal and the like. Those that didn't do that, fell.
So its less about who pays tax, and more about who is going to give money to the unemployed?
The tractor created the middle class by giving more people access to jobs that paid better and provided more free time. It is yet to be proven who will benefit from the advancement of LLMs, but there is some consensus in the article that the large companies operating these LLMs will be. From there, proposing taxes on that additional profit doesn't seem ridiculous.
They even get to use fuel that has less taxes on it since they don't drive on public roads.
Theoretically, the only two things that any human go to earn money is (a) use muscles or (b) use brains.
I feel like AI plus robots covers all the territory. Maybe not quite yet - maybe we have a few more years, but what job could a human do that couldn't be done by an AI controlling a humanoid robot?
The alternative is like feeding an animal instead of letting it live the lifestyle it's adapted for. That helps it in the moment but over time its capacities atrophy and it ends up weakened, twisted and harmed with nothing to spend its natural instincts on.
The "job" can be things like volunteering, artwork, finding a cause, inventing, raising children, teaching...
Work can be subsidized and based around personal interest and achieve the "psychologically healthy" aspect that you describe.
Sure, I guess -- if you're not charging for your time, it's more efficient to use human labor than AI+robots.
> inventing
If we get working AI, humans will be unemployable at inventing useful things.
> teaching
There are already multiple startups trying to replace teachers in the classroom.
The point you're responding to is that humans would be able to do it for personal fulfillment and thus preserve their mental health, not to be useful to someone else.
When they used to say that you'd make more money going to university, that is what they were talking about. The idea was that if you went into the research labs you'd develop capital to multiply human output, which is how you make more money. Most ended up confusing the messaging with "go to university to get a job — the same job you would have done anyway..." and incomes have held stagnant as a result. It was an interesting dream, though.
But not really what everyday normal people want. They like to have somewhere they can show up to and be told what to do, so to speak.
The ideal society is one where humans only do things that they actually enjoy doing, whatever that is, and automation does the rest. Any human being forced to perform labor not because they want to, but because they need to do so to survive, should be considered a blight on the honor of our species.
To clarify, this isn't about the farmer paying a "sales tax" or VAT as % of the price of buying the tractor.
The article is talking about something else: paying additional machine taxes to cover the loss of unemployed crop workers that would have been paying individual income taxes.
I do. Agriculture products are zero-rated. But obviously it depends on jurisdiction.
That's exactly what AI is doing.
We got lucky that when farming was being mechanized, it happened slowly and while manufacturing was still growing and could soak up the labor. When manufacturing was offshored/automated, we got less lucky and a lot of people faced a massive drop in quality of life as they lost their high paying jobs and couldn’t find equivalent ones in the service sector.
Now we’re seeing a potential massive job displacement, the force doing the displacing can likely also do many of the new jobs that may arise, and the change is happening faster than any ever before.
Capitalism doesn’t promise to create new jobs when old ones are automated, we’ve just gotten lucky in the past, and our luck has run out.
You’ve already stated what circumstances are different now.
Tractors are taxed in Montana. We have a "business equipment tax" that works roughly like the tax on cars, but applies to assets that don't drive on the public highway such as tractors and other machinery. Republicans have waged a decades long campaign to reduce/abolish it though.
Employment was a product of the industrial revolution. In the age when most everyone worked in agriculture, they owned the farm operation.
We didn't tax the tractor to bail out failing small businesses then, and I strongly suspect there is no will to tax AI to bail out failing small businesses that might succumb to AI today either. The population generally doesn't like small businesses and is more than happy to see them fail.
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.
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.
> […] those are things that should still be solved at a much higher level of abstraction […]
I don't think that makes much sense. If a data center consumes all available electricity in a given municipality, it may provide AI services at a very low cost, but thereby makes the region uninhabitable. There is no way to "solve" this at a higher abstraction level. Or alternatively, consider a factory producing consumer goods, which emits toxic fumes; we can limit the amount of fumes the vicinity of the factory is exposed to by implementing very expensive filters—thus increasing the final price of the goods—or externalise all the negative effects—such as health risks in the population, ecological demise, and subsequently lower property values—to society, achieving a lower final price.
Currently, we often pick the latter option, because it usually has the better profit margin. I agree that it's a systemic issue that must be addressed holistically, but the actual solutions have to be implemented at all levels of the production chain. And this means the cost attached will have to be included in the price of all goods.
While I'm not sure I agree, this is not solved by tackling things at a low level and should be done at a higher level of abstraction - that's what they were saying.
> don't think that makes much sense. If a data center consumes all available electricity in a given municipality, it may provide AI services at a very low cost, but thereby makes the region uninhabitable.
If the data center was providing streaming services would you want to manage that differently? Imagine you had a data center that solved some user problem X, and another one that solves the same problem. Data center A uses AI, B does not but uses more power. Would you want to tax B less? Given what you've said so far I'd assume the answer is no - you'd want to tax that more because it's not really the AI part you care about, it's the power usage/emissions/local impact/externality X you want to avoid.
> I agree that it's a systemic issue that must be addressed holistically, but the actual solutions have to be implemented at all levels of the production chain.
Actually the more abstract sometimes the fewer places you have to deal with it. You don't have to figure out what cars everyone has, the specific MPG of each, driving patterns, how far your delivery driver went, whether they had other packages, etc - you can tax gasoline. This automatically flows through and avoids lots of wrangling about details and loopholes.
> Currently, we often pick the latter option, because it usually has the better profit margin.
Yes - and this drive makes it hard to manage when you put very precise rules around it. Tax AI and watch things rebrand as whatever falls just outside the limits of AI. See how products are built, deconstructed and remade exactly based on specific tariffs. Ford used to ship vans with windows and seats installed, then take them out again after they arrived!
I believe unfortunately it’s intractable because humans cannot successfully align incentives and actions at a scale large enough required to solve it
The reality is that the floor to become "useful" is relatively low, which means the few billioanires have a large pool of potentially useful people of which they only employ some, leading to no greater salaries due to labour competition.
The other potentially useful workers cannot pool together and compete as the barrier of entry in the sector is prohibitely high.
So a natural moat emerges over cost of setting up a company, workers beg for a job of which they will take for a small wage and a few billioanires control the market.
This is a much closer approximation to the market we currently see
In any case, the argument won't work for majority of the population without a college degree. Are you going to have 50+ year old truck drivers upskilling in a fancy new tool to keep a job? And again, how long until that new skill you upgraded them to is now done by AI as well.
I dont see that happening
See this explanation and corrected graph: https://fraser.stlouisfed.org/title/economic-synopses-6715/w...
1. Even the article you shared mentions that starting in 2003, earnings has stopped tracking productivity. "Total compensation remains close until 2003, but does not follow 2003’s uptick in productivity growth (behavior which remains a topic for future research)."
2. They use average earnings and not median earnings. Average earnings include people like CEOs. This by consequence shows that inequality among workers has also increased. Check out chart 4 here to see how much smaller median wages are compared to average: (https://www.csls.ca/ipm/23/IPM-23-Mishel-Gee.pdf)
3. Apart from the average vs median difference, the biggest point of contention between that study and more recent ones is the measure of inflation used. The 2007 study you cite uses a measure of inflation that also includes things paid by employers like medical insurance. It turns out that using that one leads to significantly lower inflation. If you use consumer price index, what workers actually pay out of pocket, the difference again becomes larger. Citing page 37 of the study above: "In other words, that the prices of consumer items has risen faster than a broader index of prices that includes net exports, government goods and services, and investment goods. Therefore, for a given increase in income, the purchasing power of the consumer has fallen faster than that of business for investment goods and foreigners for U.S. exports."
The article I shared before plus this other one describe all the discrepancies (https://www.epi.org/productivity-pay-gap/). Specially see chart 10 in the PDF study. That shows all possible variations of how you measure productivity and income. No matter how you look at it, the most substantiated conclusion is that income has NOT matched productivity.
We could, conceivably, learn from our mistakes and do something different now. But we're not.
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.
Perhaps the more interesting bit is that you only seemed to have noticed it when it is asked about white collar workers?
Taxing Robots : Easier Said Than Done (2017) https://www.ctf.ca/EN/EN/Newsletters/Canadian_Tax_Focus/2017...
Robots, technological change and taxation (2017) https://www.taxjournal.com/articles/robots-technological-cha...
Why robots should be taxed if they take people's jobs (2017) https://www.theguardian.com/business/2017/mar/22/robots-tax-...
The average person now is far wealthier in terms of actual purchasing power than the average person 100 years ago, and that's largely because of automation making everything cheaper.
access to housing is incredibly expensive. Measuring their purchasing power for how many scented candles they can buy is pretty meaningless when they are much closer to homelessness than ever before.
It's called Baumol's cost disease.
The people who are "automated away" and have reduced income are also less of a consumer. In a society where most jobs are automated, who are the consumers?
So you tell me: where are the consumers? Why aren't we all unemployed and unable to afford to buy anything now that those agriculture jobs have been automated away? Or did we find other productive activities to spend our time on?
Maybe the current system would've worked if it was built on many more small companies. These monolithic corporations funneling power upward are the death of civilization, and leadership are clearly high on their own farts. Or just want to be on top in a new feudal age.
1. Financial perspective. People are too focused on what "the best" is, rather than what is the most financially viable at scale, which is what really matters. At the peak of the Ethereum mining craze in 2016/2017 the GTX Titan X was the best performing GPU. But buying 200$ AMD Polaris GPUs was what gave you the most performance per $ and per watt.
2. Open source models keep being impressive and lagging only so much behind the closed source ones. It's hard to predict the future, but few years from now the most viable application might be to internally fine tune and deploy on whatever cloud or internal infra open source models. I have already many use cases in prod where Gemini Flash 2.0 did a great job, and that's an old model by today's standards (summarizing news/translation). Now I have in production a service that reviews pull requests and updates documentation/JIRA accordingly when they are merged. That requires quite more plumbing, agentic approach and thinking, but yet again open source models can do a terrific job already there.
3. At the end of the day, the lion share is going to be eaten by whoever provides the best applications, not models, but conversely we're also living in a space where more and more you can just build roughly-the-same-feature with few $ worth of APIs.
4. Even more, the biggest benefit will lie among those who will leverage AI in the best way. Companies and individuals able to really delegate successfully complex tasks making crazy savings. Who knows who's really gonna take the biggest advantage. Maybe US companies, maybe not.
Thus, in essence, I envy your certainties around the future, I personally have lots and lots of doubts and have no clue who's gonna eat whoever's lunch.
I don't think so: People flocked to ChatGPT because it was the best, even though there are far cheaper options. If you are 10% better than any competitor, you don't get just 10% more market share, you get far more. It's a winner-takes-most situation.
Don't tax tools or income, tax the accumulation of it: wealth.
But either way, taxing the tool is micromanaging the problem, and some powerful people cynically promote that because they can aim the details away from themselves.
In some ways taxing wealth is quite simple, because wealth is already meticulously recorded via contracts and owners go out of their way to estimate the magnitude of their wealth for example to borrow money or for other financial and economic obligations.
Another approach would be to tax capital gains at the same rate as income and introduce additional top brackets. I have a hard time to find a good faith reason for capital gains to be taxed less than labor.
But there are enough other ways where it's really hard and unsolved. Imagine someone bought an $X irreplaceable ancient urn to hold the ashes of their parents.
How do you calculate the $Y "wealth" inside that non-fungible urn on their mantelpiece today? How can one determine which "I would buy that for X" statements are falsely low or falsely high?
> owners go out of their way to estimate the magnitude of their wealth for example to borrow money
I have no inherent problem linking one voluntary claim of wealth to another conclusion of wealth... But what happens when someone wealthy who doesn't actually need any loans applies for them while presenting themselves as a pauper?
Or cases where someone seeks a loan and their rationale is "I may have negative net worth but you'll be made whole because you're first in line", as opposed to "I have high net worth"?
> I have a hard time to find a good faith reason for capital gains to be taxed less than labor.
Consider a small company of AcmeCo with 1-10 workers all dedicated to the art of Acme'ing, each taking tiny wages (but accepting shares) because they believe in the mission and want to launch the company.
On a technical level, anything they (might) get would be capital gains, but clearly it's not the same as passive rents with no labor behind it. It's closer to deferred wages.
I heard that, at least in the US, you can avoid capital tax gain by just... never selling. Borrow against your wealth instead.
If you increase capital gains tax, the more risky ideas will no longer be viable investment vehicles even though some of them would have been successful. Across the entire economy, the net effect will be less innovation, stagnation, and loss of power relative to foreign countries.
Tax rates are carefully tuned to maximize tax revenue without unduly disincentivizing production. To change them purely based on vibes would be catastrophically stupid.
Please don't vote.
I don't really believe it. Investment is always incentivized by tax breaks and other political gifts. But once things turn bad it's the citizen's turn to pay for it. Fire all staff? We pay for unemployment. Pollute the soil? We pay for cleanup. Empty the water table? Guess who's gonna depend on the state for clean water...
> To change them purely based on vibes would be catastrophically stupid.
Please tell that to every neo liberal in my country. Reducing taxes on the rich seems to be their passtime, while every time some kind of capital gain is mentioned, everyone and their dogs become experts in economics and can tell you it's folly.
> Please don't vote.
Please don't look down on others.
I find this argument somewhat unconvincing. Where is most of the wealth? In hard assets, such as real estate and financial assets, such as stocks and bonds. The former are very difficult to hide, for obvious reasons. As for the latter, the ownership of every single share is recorded in large databases (e.g. DTCC, Clearstream and Euroclear). In that sense, the "physical location" of most of the wealth is well known, so in theory it should really not be difficult to tax it.
The unit of account for tax is the currency of the relevant sovereign. Most contracts for income are denominated in that unit of account, even if it is not there is often a highly liquid market (FX) between units of account.
Most wealth is not stored in assets where the unit of account is that of the sovereign. This counts double for assets with a physical location.
This isn't something that can be easily hand-waived away.
My understanding is that you say that taxing things denominated in a foreign currency is difficult? But why? I already pay taxes on my capital gains denominated in a foreign currency (for example dollars). There are official government exchange rates for tax reasons, published daily. I don't see anything to hand wave here, because there's no problem.
It's too easy for people to offer hypothetical prices they'll never have to execute on. You could establish a price by forcing people to sell anything to the highest bidder, but that kinda explodes any conventional idea of property, and now the government is spending all its time running a trillion sketchy auctions while no human has time to do productive work anymore because your neighbor is trying to buy your car for $1 and you need to arrange a more-plausible offer before you lose it.
The point I'm trying to make is that assets such as land are not denominated in any currency and typically end up being held for such large amounts of time with such substantial transaction costs that's there would be a large cost involved in knowing what the value of the thing being taxed is.
If I pay you $100k, £100k or ¥100k we can use spot rates to work out how many € that is within much less than 1%.
If I own a piece of land how would you answer the question, "what should the value for taxation be?"
If you go with the last transaction price then this will have a substantial impact on properties that haven't been sold for a long time and encourage people to enter into transactions that look like sales but aren't (such a 999-year lease).
Leave it up to a government agency to decide and this agency will come under huge pressure to favour one type of activity over another. How do you value land owned by the government? What if that land is privatised? The UK's attempts to deal with this when it privatised BT completely destroyed the fibre to the premises industry in the UK for years.
I completely agree you then. I think people arguing for wealth tax severely underestimate how many edge cases and loopholes there are.
And that's just the legal version.
I know someone who used to work as a business lawyer. She spent years trying to track down the true owners in various cases. At the very least it's an expensive business. And sometimes it just couldn't be done.
Of course governments can cut the knot with physical assets, walk into a building with troops and/or police, and say "This is ours now." Or they can order banks to hand over the money in accounts.
But before they can do that, there has to be some certainty about the owner. And even getting part way there can take a while and cost a lot.
The real problem has always been measuring "current wealth" with accuracy, fairness, and not spending more than you collect on an army of auditors.
I don't see how "flat" makes anything easier, since it's a downstream calculation.
Distribution of wealth is about the distribution of real resources, especially control over human labor. And that underlying thing can always be taxed, optimized, or even repurposed to better serve the needs of society.
Depends on the tax. It is a lot easier to move move profits to a low tax jurisdiction than it is to move land or machinery.
> But either way, taxing the tool is micromanaging the problem, and some powerful people cynically promote that because they can aim the details away from themselves.
I definitely agree with that.
There are all sorts of problems. Do you tax this notional "income" where the work is done or where the AI runs or where the company that owns it is incorporated?
Nobody calls alcohol duty “micromanagement”.
For products like petrol, it’s widely known that from money paid for a liter when it’s sold, say, in the UK, more money stays in the UK’s government pocket via a complex web of taxes and duties, than profits the oil production company that supplied crude oil for that petrol.
Maybe taxing a kWh of the AI data center energy consumption should be a thing? I don’t know.
They don't, but it really is! There's different rates for different specific gravity and different processes.
Re: petrol, I note that the UK government is trying to replace this as part of the EV transition with a milage tax, which is proving controversial and fiddly.
Energy tax is a hugely fraught political issue. The "poster child" for cheap energy is a little old lady huddled over a 1kW one bar electric heater. Energy bills are a big "fixed" cost for households. Many small businesses have been affected by energy price rises - e.g. restaurants. And yet at the other end AI represents such a huge deployment of capital expenditure that it's distorting prices for everything else - energy, RAM, and so on.
I think I'd favor a "personal allowance" model similar to income tax, where you get the first X units of energy tax free and then have to pay VAT, carbon taxes etc. on the rest of it.
I can see why this is tempting, but I think there's a better way to legislate with this, especially with that poster child.
I'm a landlord of a flat. I used to live in it before I left the UK. The EPC rating is D, so despite the double glazing it's still pretty cold in winter. I am now living in a fancy new-build in Berlin which, despite being 3 times the size of that flat, can be kept warm for 10 months of the year just by body heat and waste energy from the white goods — even with higher electricity costs in Germany, it costs less to be comfortable in this building in a T-shirt all year round (even while snow is falling outside), than to be wearing fleeces and sleeping with hot water bottles and still not be completely comfortable in that flat in the UK.
A few years back there was a proposal for legislation that would increase the requirements for all rental property to be at minimum C-rated by 2030, as I understand it this was dropped and the current minimum is F or something ridiculous like that. My agent's advice is to not do anything until the legislation is actually sorted, even though I'm happy to spend whatever to upgrade the place, because until you know what the legislation demands there's always a risk of doing the wrong work beforehand, having to rip it out and put something else in.
IMO, government should push for this kind of boost, as it has with other energy-saving and insulation-boosting measures.
My first rental after graduation was a Welsh solid stone wall construction; like the example you gave, I couldn't keep warm there even with the electric bar heater a meter from me.
Like, the housing crisis in the UK, there's a lot of empty houses, they're just in places with no jobs, could encourage employers to go there, but HS2 mumble mumble. Could build more houses, but greenbelt, and existing homeowners like the house prices going up, and lots of builders were Polish and oh look Brexit.
Right now, winter fuel allowance is literally burning money because the houses are not good enough. This is also not sensible.
Thinking about who might benefit from it being a conspiracy, the only finger I can point at would be Russia? (Well, unless it's a long-term generational anger at the British Empire, which I have discovered is more of a thing than most Brits realise).
(Different environmentalist group, different time)
“taxing the tool” makes me think of transaction taxes, like a tobin tax https://en.wikipedia.org/wiki/Tobin_tax
Tax on electricity is already a thing. That can be adjusted and even be made progressive. Extra for fossils and so on.
That sounds excellent. Also water usage.
Really, AI has externalities and it should pay for it.
Should an AI data center from pharmaceuticals or biotech startup be taxed extra per kWh, even if the AI is purely used for medical research?
> Should an AI data center from pharmaceuticals or biotech startup be taxed extra per kWh, even if the AI is purely used for medical research?
That's not a gotcha.. those are all policy choices. My personal preference is, yes, of course - medical research today is taxed just fine. If there's lobbying to specifically grant tax benefits to medical research, I can see an exception being carved.
I think we have no option other than taxing loans and other money movements like that in sufficiently large scale as ordinary income. If I get a loan for USD 200k for a house once a year, I think it isn't income but if ElMo gets loans worth USD 20M a year, every year, he should pay income tax on all of that as if it was ordinary income. How he pays it? I don't care. Sell some assets. Oh and that sale is also taxable.
It is funny because in the copyright debate, AI is often treated as human. Like "we didn't steal your data, the AI just learned from it!"
Problem solved.
With increased automation, this only gets more extreme.
Or perhaps this could serve as a kind of test: a technology that cannot be reliably used in tax evasion enforcement simply isn’t worthy of the name AI.
Or perhaps it reveals that we have structural problems, and certain concentrations of wealth with or without automation are a threat to the just and effective operation of society and should therefore be as vigorously opposed as crime or foreign attacks.
So somewhere along the line it could be very beneficial to be poor on paper.
Or are we going to blame these people for corruption while the (ultra) rich are doing this constantly?
"It's good to be the king!" (Mel Brooks)
Taxes on labor are actually a method of extracting money form the rich capital owners.
As you mentioned it's easy for the rich people to hide their wealth and avoid taxes on its growth.
The one thing that was very hard for them to avoid or hide was purchasing labor which they had to do to enlarge their wealth. So governments taxed that.
If governments lowered the taxes on labor it wouldn't mean middle class would earn more. It would only result in capital owners paying less for work. They always pay as little as possible and how little a person is willing to work for is the same, tax or no tax. Because money in hand is what counts.
Of course since as labor is being replaced with automation this way of collecting tax on capital growth becomes less and less feasible, so things are bound to change.
Let's say EU and US taxes AI tokens. India doesn't, so almost all prompting done by international companies now is outsourced to India, and still not taxed.
Or do you tax AI companies and tax tokens "at source"? Then, obviously, they either lose competition with foreign (let's say Chinese) companies that do the same but are not taxed, or more likely all AI companies move out of EU and US.
I guess the other countries can slap sanctions on them, but the people benefitting won't care really.
I can only image the Kafkaesque tax code the government would come up with. Then it would create all sorts of weird incentives as companies attempt to minimize tax paid.
This is not a reason to stop taxing (i agree with most here that taxes should be higher), but to design taxes that can't be circumvented easily.
(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.
Or maybe we treat them like motor cars and make people register them on an annual basis if they’re going to use them commercially… like $30k/year or something.
Landfills full of broken robots is totally something humans would do haha
It really misses the forrest from the trees. You're transported into a world in which efficiencies mean that much fewer people need to work, but somehow government services and entitlements are unchanged and we need to hit roughly the same percent federal tax receipts or ... what exactly?
But ok look at it this way... What is silly about taxing a sector that is undertaxed because the current system assumed income taxes?
- healthcare
- armed forces
- road/utility maintenance
bacially everything funded by taxes
It's a matter of perspective. I'm pretty sure that from their perspective those people very much need to work because they need to pay taxes, rent, insurance, food etc...
What mechanism is going to ensure that the increased productivity is going to result in lower cost of living for these people such that they no longer require to spend so much of their life working to survive?
That's a pretty Matrix "human-battery" level attitude to your fellow brothers and sisters. "They need to work to pay taxes, rent, and insurance". Ie, they only exist and are allowed to live to be serfs - or cattle really.
The thing is companies and even self-employed individuals of a certain wealth level know how to "(ab)use" it. From illegal but trivial and hard to detect tax evasion to financing personal lifestyle by having the company pay for certain luxuries (cars, computers, furniture, etc.).
If you have the wealth to have a dedicated office that dedicated office can be your man cave if you justify it with having all sorts of amenities for customers. And good luck to whoever checks taxes to find out how exactly things are used/not used.
All of that usually means that companies, company owners and high ranking managers get away with not paying taxes for a lot of things that everyone else does simply because they don't have a say within these companies.
And all of that is before you go to the tax advisor.
I am sorry, but if you do hard honest work the chances of you getting rich are beyond slim. Even worse when you do something that actually benefits society.
Hold on now, how will 'trickle-down' economics work then ? Think of the poor companies trying to provide a living for all those AI. /s
Same as when one developer with AI can do the job of 3 developers and the other 2 are fired.
In my anecdotal experience moving piles of dirt manually (for large piles of dirt) it is generally the digging up of the dirt that takes the most effort, if I had to move it with buckets or a wheelbarrow I would still expect that to be the case.
I would furthermore expect that there are some functions at work in modelling the moving of large piles of dirt using manual labor.
Your model may make sense with a small pile of dirt but I don't think you will find 1 remains and 2 go, at best 1 goes and you take a bit longer to move the pile.
Also, this is just my observations of having had large piles of dirt to move with manual labor (including wheelbarrows and several of those) As you scale up the amount of people you could drop by adding wheelbarrows goes down, because again the main problem is the digging. The wheelbarrows becomes a thing you trade off diggers on running. You will want to have more wheelbarrows that wheelbarrow users so that diggers can fill wheelbarrows while the users are running the already filled wheelbarrows to where the dirt is being dumped.
At this point then you would probably want to drop the wheelbarrow analogy and go to a backhoe and a truck, but then all of the various observations of the other flaws in the wheelbarrow argument become apparent, such as the factories to build backhoes and trucks, the training for backhoe operator etc. All leading to a relatively strong argument that existence of backhoes and trucks are a boost to the environment, potential job creator and those jobs will be more skilled jobs leading to higher wages in the economy.
The value of labor is dependent on the demand of that labor and tools increase demand by increasing what projects can be done.
That's unique in human history
Sadly not unique in human history.
AI is on track to being able to remove a society-changing amount of jobs, wheel barrows improved worker's efficiency.
Watch the news. One crisis after another, so maybe that freed up work force and the wealth generated by "AI" should be used to tackle at least one of them.
Huge amounts of taxes and dedication of that money could be a first step.
Alternatively don't raise taxes and use the oh so great AI to tackle these issues. Should be trivial if you have ">90%" of all work freed up.
social unrest must be priced in at this point somewhere
We, as a society, allow corporations to pull resources from the commons because the other side of it is that their existence provides a value through jobs and tax revenue and such.
If the equation shifts such that the benefits dry up, but the downsides only increase, why should we allow that?
The solution could be as simple as higher business taxes or as wild as universal basic income.
It could be something like all AI is forced to be open source, open weight, free at least as far as the knowledge parts.
There's certainly no God given right to exclusively benefit from an invention. We allow that for as long as we care to.
And there's nothing illogical about changing these decisions as factors change.
I am deeply sceptical of the idea that 99% of us are suddenly going to be idle any day now, so I think endless think pieces on what we should do when that day arrives are kind of pointless. But it is certainly obvious that if it did happen, we would have to reassess how we do stuff.
We don't let corporations do anything because they provide value through jobs and taxes. What company do you know that exists (beyond transiently) solely by paying taxes and employing people?
Companies are an extension of the individual, they exist to make money for the individuals that own them so that those individuals can acquire goods and services that they themselves need or desire.
How do companies make this money? Holding people at gun point and taking it is generally illegal; instead they resort to providing goods or services to some set of people who are willing to pay for them.
To provide these goods or services they need to employ people. The fewer people companies in aggregate can employ, the better for people in aggregate since those people can acquire "things" (food, jewellery, phones,...) for less of their own labour (or equivalent dollars).
If the "benefits dry up" as you say, people will stop sending their hard earned money to this company and the company will eventually cease to exist. Your fallacy was assuming the benefits were the jobs and taxes, not the goods and services provided.
All of what you said can be true and also others can and do decide to allow or disallow a group to exist.
Corporations don’t have to exist; they are a creation of society and thus can - and I think obviously- should be changed
Certain configurations of the corporation are described in our laws, e.g. "limited liability".
Wolves predate towns but we choose to not allow them in towns.
That has existed for millions of years already. First as hunting companies, then as raiding companies. It exists in other species as well. It will never go away. It has existed in every human society, no matter what political or economical ideology.
The real question is how companies should be organized and owned.
Clearly we're talking about a specific modern legal entity with a specific organization that, as you say, can change.
It will not take longer than until sunrise next morning before all those corporations are now different single individuals who contract their whole company structure again and now have everything from job contracts to investor contracts in their own names instead, using probably the same kind of complicated contracts that preceded the modern corporation as a legal entity. What did you benefit?
2. I never said tax is the end all be all of the situation. It’s one attribute we can use to combat AI take over and wealth inequality in the face of a multitude of solutions that can be executed. It is not consistent with logic as shown by the wheel barrow example and I am saying it doesn’t need to be. Understand?
https://fortune.com/2025/11/07/what-is-the-k-shaped-economy-...
That's the problem. AI has the same tax problems as corporations. But US corporate taxes are historically very low and easy to evade.
In many of the world's richest nations, the wealth inequality has become super inequality.
And for the ultra rich, the recent pandemic was a boon, not a bane. This pandemic was the best time in history, if you are a billionaire.
* World’s top 1% richest elites own more wealth than 95% of humanity, says Oxfam.
* The top 1 percent richest own 43 percent of all global financial assets.
* Despite being home to 79 percent of the world’s population, Global South countries own just 31 percent of global wealth.
* According to Oxfam, the fortunes of the world’s richest people increased as much in the span of 24 months (2000-2021) as they did in 23 years. Now the bottom half of the global population would have to toil for an estimated 112 years to earn what the top 1% now rake in over just 12 months.
* “The pandemic—full of sorrow and disruption for most of humanity—has been one of the best times in recorded history for the billionaire class.”, says Oxfam.
* The world's richest people significantly increased their wealth during the pandemic, with two-thirds of the $42 trillion in new wealth going to the wealthiest 1%. Billionaires got 54% richer during pandemic. This surge in billionaire wealth occurred alongside rising poverty rates, as many individuals faced economic hardships due to the pandemic. This has raised concerns about money flowing to the well-heeled instead of to services for those hit hardest by COVID-19. It also points to broader potential implications for a sustainable reset of the global economy.
* Less than 8 cents in every dollar of tax revenue collected in G20 countries comes from taxes on wealth, says Oxfam.
* Oxfam found that the wealthiest 1% of the world population emit as much carbon pollution as the poorest two-thirds of the entire human population.
* “Only 0.4 percent of the world’s largest corporations are publicly committed to paying workers a living wage and support a living wage in their value chains”, Oxfam wrote.
* Oxfam likewise discovered that seven out of 10 of the largest corporations on the planet either have a billionaire as their CEO or have a billionaire as their principal shareholder.
* The world's richest people have significantly increased their wealth, with the top ten billionaires collectively adding over $500 billion to their fortunes this year, largely due to the booming AI sector. As of now, their combined net worth is approximately $2.5 trillion.
* 148 top corporations made $1.8 trillion in profits, 52 percent up on 3-year average, and dished out huge payouts to rich shareholders while hundreds of millions faced cuts in real-term pay.
* The world’s richest 1% own 43% of global financial assets, and the wealth of the top five billionaires has doubled since 2020, while 60% of humanity got poorer, according to a report by Oxfam.
* The five richest people on Earth in 2023 were Elon Musk, Bernard Arnault, Jeff Bezos, Larry Ellison, and Warren Buffett. Their combined wealth skyrocketed from $340 billion in 2020 to $869 billion just three years later. Adjusted for inflation, this was a real increase of 114%.
* Every year, America’s richest citizens paper over their earnings with losses and use other creative accounting strategies to shelter their fortunes, as the tax code allows them to do. As a result, the country’s billionaires pay lower tax rates than many of its millionaires do. Indeed, they pay lower tax rates than many middle-class professionals.
* Elon Musk, the world's richest man who's on track to become the world's first trillionaire, hasn't paid income tax for years.
* Many of the wealthiest individuals in the world, including billionaires like Jeff Bezos, Elon Musk, and Warren Buffett, Mark Zuckerberg, George Soros, Michael Bloomberg have been reported to pay little or no federal income taxes, due to legal tax avoidance strategies.
* Shockingly, the Billionaires in the U.S. pay a smaller tax rate than most teachers and nurses.
* ProPublica has obtained a vast cache of IRS information showing how billionaires like Jeff Bezos, Elon Musk and Warren Buffett pay little in income tax compared to their massive wealth — sometimes, even nothing.
* According to leaked tax returns highlighted in a ProPublica investigation, the 25 richest Americans paid $13.6 billion in taxes from 2014-2018—a “true” tax rate of just 3.4 percent on $401 billion of income.
* A new Oxfam analysis shows the wealth of the 10 richest U.S. billionaires increased by $365 billion in just 12 months, based on data from Forbes.
* According to a 2021 White House study, the wealthiest 400 billionaire families in the U.S. paid an average federal individual tax rate of just 8.2 percent. For comparison, the average American taxpayer in the same year paid 13 percent.
* The Tax Cuts and Jobs Act, Trump’s signature first-term domestic-policy package, helped these billionaires keep more of their money. The One Big Beautiful Bill Act, passed this summer, extends the TCJA’s tax cuts, creates new business loopholes, and lowers taxes on estates. To help offset the revenue losses, the Trump administration is stripping health coverage from millions of low-income Americans and shrinking the Supplemental Nutrition Assistance Program. The rich, including Trump, will keep getting richer. The poor will pay for it.
Sources:
https://www.oxfam.org/en/press-releases/worlds-top-1-own-mor...
https://www.oxfamamerica.org/explore/stories/do-the-rich-pay...
https://www.propublica.org/article/the-secret-irs-files-trov...
https://itep.org/tax-day-billionaires-wealth-inequality-corp...
https://www.theatlantic.com/economy/archive/2025/08/billiona...
https://www.oxfam.org/en/press-releases/wealth-five-richest-...
https://geopoliticaleconomy.com/2024/01/18/billionaires-rich...
https://www.oxfam.org/en/press-releases/less-8-cents-every-d...
https://www.weforum.org/stories/2020/10/the-rich-got-richer-...
https://www.marketplace.org/story/2023/01/16/how-the-worlds-...
https://fortune.com/2022/05/23/pandemic-billionaire-wealth-o...
https://www.cnbctv18.com/world/wealth-of-worlds-top-10-billi...
https://www.businessinsider.com/10-richest-people-ai-boom-te...
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.
If machines can make all the work, then, who owns the machines is the only relevant question.
Chances are half of humans would vote for it too
- 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.
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/
When Amazon stopped investing and started extracting those profits everyone paid taxes on that giant money pile that wouldn’t exist without the investment. Every Amazon worker, CEO included, paid taxes all along. Amazon’s service providers and partners did. Amazon now does too, and the tax coffers have won big.
Taxation offsets from investments should be broadened (to individuals), not shamed.
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.
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.
I used to like the phrase "that idea is deeper that it first sounds", but Enron Musk ruined that for me.
Ask yourself if this is a race you're willing to lose
The nations that survive will be the ones that control the use of AI.
And to be quite blunt, any comment that suggests that AI is relevant to more than a handful of jobs doesn't understand how the world actually works.
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.
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.
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.
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.
I only know about this TED Talk because it was in a mandatory training course for my work, but these is the kinds of things being said: https://www.youtube.com/watch?v=KKNCiRWd_j0 (he's trying really hard with the Steve Jobs look)
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?
The robots and automations are like the trees and bushes from our gatherer's past.
People would just take what they needed. No one would say: you are not allowed to take a berry from this bush because it's mine!!!
https://www.npr.org/2014/07/28/335288388/when-did-companies-...
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
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?
[0] https://finance.yahoo.com/news/bill-gates-wants-tax-robots-2...
https://archive.org/details/ageofautomation0000sirl/mode/1up
(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)
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.
If AI is generating wealth for someone, should we tax it?
It enables a bit more automation of work than it was possible earlier. Automation alone did never reduce jobs significantly.
Unless you mean "all jobs across the entire economy", this is pretty obviously false. People used to weave fabrics by hand, make screws and nails by hand, bake bread by hand. These jobs hardly exist anymore.
Of course this did not imply that all jobs disappeared and the economy collapsed. But the sense in which "AI is not replacing workers" is contingent on specific features of software development, not about automation in general.
It's the kind of organization that could be financed by taxes on AI mega-corp.
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.
Everyone works less, everyone works better, we will then see how much humans we still need.
Communism didn't look great next to capitalism (east europe vs. west europe) but those people were also happy.
My idea is not communism though, its a 'if you do beneficial things for society, we have resources for it'. If you are teaching kids, we the planet have resources for you.
If you take care of kids, we the planet, have resources for you.
Lets call it Civic Duty Dividend or Care Standard or Public Service Money.
That sounds nice, but who is going to decide exactly which behaviors to reward and by how much?
To avoid grift and corruption, we should probably have everyone vote on it in some kind of democratic process, right? Well that's basically what we have today with municipal elections, and looks like the consensus is we actually don't want to pay teachers all that much.
I don't think i have the choice of changing the world with a hn comment.
Which people were happy? Nobody hates communism more than Eastern Europeans. I don't know a single elderly (i.e. lived through communism) person in my country who doesn't hate communism. I think you have a rose tinted view of how communism worked out on Europe.
I don't want to romantesize it though.
Suspect we're at a point where any single gov would struggle to control the megacorps. Not just big tech, but in general.
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.
Will it pay taxes? I think you know the answer.
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.
Basically if you got a business which creates a certain amount of value, the collectives' total tax income (considering possible employees' income tax) should be the same, independently of people employed and paid. 500M profit from fully automated web hosting should result effectively in the same collective tax income as 500M profit from a factory employing 10K people.
Note: I am throwing all "taxes" in a bucket. E.g. humans need health insurance, therefore the fully automated business tax needs to reflect these costs too.
That would be extremely complicated. And would of course be corrupted to the core by all kinds of different parties seeking to benefit from it.
First implement federal and state law that requires every worker performing any profession to have a college degree in that field.
Then companies are evaluated on how much work is produced in their business (for example by revenue), and they have to either contract the equivalent number of people with those industry-specific college degrees, or even better - license the degree from a college graduate. This can also be used to pay for tuition. The student gets a mortgage that pays for her education when she enters college, and then the lender has the right to part of either her salary, or the licensing fee for her degree to companies that need it, or to people who need it.
Let's say a chef who hasn't gone to culinary college, he can pay a culinary college graduate 20% of his salary to use their degree, which is a professional license. Or a company needing programmers. They can hire immigrants or an AI to program, and pay licensing fees to computer science graduates who have the degree.
Think what I thriving market for banks, investors, and insurance companies! They will be able to package these licenses and offer them on the market to individual workers or to companies for competitive and efficient rates. The college student of course gets rewarded as well, as they can rent out their degree, or even sell it. So a good student can get several degrees, and have a very good income from both his own work and from degree licensing fees. Of course we'll make sure that students belonging to an oppressed class be allowed to license their one degree to several places at the same time.
Banks could lend out money to students, with the future college degree as security. After graduation, the student either gets a job that requires that degree, or licenses that degree to another person or to an institution which collects degrees and licenses them on one or several degree licensing marketplaces. Most would use these third-party re-licensers to simplify the paperwork. For example when a company needs to license a degree for a temporary project of just a few months, or when a degree holder takes leave from their own job for let's say three months. Then she can have some income from renting out her degree during that time.
I'm sure you've already thought about the problem of students who have mortgaged their future degree, but do not graduate for some reason. What happens to the money the bank has invested? This problem is mitigated and solved by packing these degree mortgages into Credit default swaps to hedge the risk. Since most students will graduate and be a return on the investment, we will pack all degree mortgages into investment funds, and offer them on the international financial markets, with sophisticated leverage tools. So, investors will not feel the pain if 1 out of 10 students do not finish their degrees, that will be very much offset by those who do - especially when leverage is used.
This is how we solve social and environmental issues, make education affordable to everybody, create a great investment boom, and make the younger generations stakeholders in the economy. Smart parents would take advantage of degree mortgages for very low monthly rates if they sign them for their child already during pregnancy, meaning they could even be paid off before graduation. That's a good start in life!
For now we can tax them because they depend on us. Once they don't need us anymore, it's over, they'll let us starve and carry on.
And they have allllll those guns too...
But yes, you're right, the core problem is that in the USA, people need to justify their existence through labor. If they can't labor, they can't justify their existence (barring the slim few outliers on benefits, who are constantly under attack for being lazy or whatever).
However, if we take a step back and just consider reality for itself, we're just talking about resource allocation. Under the current system, the allocation of resources is dependent upon how much cash any given person can command, which is ostensibly connected to the value of their labor, but in reality, is clumpy and is connected first and foremost to how much cash they or their family historically had, and secondarily how valuable their labor is to capitalism, rather than to humanity. Thus investment bankers make 9x what teachers and EMTs make.
There's no reason we need to play that game. We can simply allocate the resources along more efficient terms, such as, taking the robot-harvested food, having robots put it in self driving trains and trucks, and having it delivered to people who need food.
Money is, after all, just a record of debt to facilitate trade so that transactions do not have to be completed immediately. Consider your job. You work so you can eat, but you might not be hungry at work. So, instead, you offer your employer a loan. The employer issues an IOU (money) to denote the promise to give you food later. Then, you take the IOU to the grocery store later and hand it back in to receive the food promised.
But in a world where a few people own all the core resources (land, minerals, etc.) and have all of their needs met by AI, they won't have any need for trade. They'll summon the AI to deliver anything they need.
It seems the only thing it might be able to serve is a record of who gets what after civil war captures the spoils from those rich few. But said civil war will require significant effort from all, perhaps even against their will; which is quite unlike a UBI system.
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.
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?
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?
Worrying about a hypothetical T-1000 future seems less urgent than reducing the homelessness that exists right in front of us.
Otherwise you're ceding control of the Overton window to the folks aiming for techno-serfdom.
My hesitation comes from the fact that most proposals implicitly assume a “fixed physical capability” for AI systems — something we don’t actually have yet.
In practice, social impact won’t be determined by abstractions but by power budgets, GPU throughput, reliability of autonomous systems, and years of real-world operation.
If scaling hits physical or economic limits, the eventual policy debate may look more like progressive taxation on high-wattage compute or specialized hardware than anything being discussed today.
And if fully automated systems ever run safely for several consecutive years, that would still be early enough for the Overton window to shift.
I’m not dismissing long-term thinking.
I’m pointing out the opportunity cost: attention spent on hypothetical futures tends to displace attention from problems that exist right now. That tradeoff rarely appears in the discussion.
So for me it’s just a question of balance — how much time we allocate to tomorrow’s world versus today’s neighborhood.
From my own vantage point, the future talk feels disproportionately dominant, so the T-1000 analogy came naturally.
We talk about tomorrow far more than we talk about what’s happening right in front of us. Quantum computing was ‘just around the corner.’ It wasn’t. Fusion was ‘imminent.’ Still isn’t.
I never argued we shouldn’t discuss the future.
I said it’s a matter of balance — something I already stated explicitly.
What? Why on earth wouldn't I be comfortable talking to people already getting the short end of the economic-stick about how the system has been in need of reform for many years?
If anything, I think you've got it backwards: Good luck convincing them that "we should probably let actual full automation happen" before debating what we want to do about it.
The obvious answer is both, but in the right proportion. That’s the entire point I’ve been making from the start. If you’re proposing that future-policy talk should take precedence for them, I’m not sure how that adds up.
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.
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.
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.
Social work demands judgment, trust, and moral accountability. Teachers shape citizens, not outputs. Health care relies on responsibility under uncertainty, not pattern matching. States run on legitimacy and human obligation, not efficiency alone.
Even if AI boosts productivity across these sectors, someone still funds universal care, education, and social insurance. Remove taxes and the welfare state collapses long before any ”AI government” appears.
Claiming AI replaces government skips the core question: who guarantees care when systems fail, people fall through cracks, or outcomes turn unjust? Algorithms can advise. They can’t answer politically or ethically.
Tax the concentration of wealth and power they amplify. Without that, automation doesn’t liberate society. It hollows it out.
— IBM Training Manual, 1979
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.
Arguably the value of a publicly traded corporation can be known because it is being traded continually. [1] For a privately held corporation it's quite opaque. Right now, for instance, Open AI is estimated to be worth $500B and might IPO at $1T but for all we know it could be a smoking hole in the ground in two years. Should we charge them a big bill in 2025 and then have the investors asking for a refund in 2027 when the real value is revised down to negative? Owners of imagined wealth could face big bills that, in the end, they couldn't pay. [2]
There would certainly be an incentive to avoid the taxation by minimizing bubbliness which might be a good thing but administering it would be a nightmare and manipulating the system to hide wealth would become a national sport.
[1] ... but it could be wrong seen from a future viewpoint
[2] I spent a lot of time in the 2010s calling up people in financial services on the phone and talking on the phone and there was no phrase that struck more fear into them than "mark-to-market", I could hear the voices crackle and feel the flinch. A bank or other institution that is perfectly able to make all its obligations as they unfold over time could be nominally insolvent at times when the market fluctuations down but winds up OK in the end -- the kind of accounting it would take to make wealth taxation accurate might be the end of fractional reserve banking and send us back to the giant Bitcoins of the Yap islands.
You’re literally just describing an end to private property, where a privileged government representative can take anything you have. The “government job” will become so lucrative that the position would be passed down within families, father to son. It is already known how these economic systems function, I think.
As for why would anyone start a business? There's no disincentive to start a business in this scheme. I'd say the current system has greater obstacles to starting a business in many cases, due to high barriers to entry and regulatory capture by large players. The purpose of policies like the ones I describe is to encourage people to start small businesses and keep them small. You can grow your business up until its value is around that taxation threshold and then just kick back. We don't want people taking big businesses and making them bigger.
One interesting aspect of trying to quantify wealth and tax based on that — is that it gives enormous advantage to bearers of wealth that is difficult to quantify. For example, political followers is wealth that you can't tax, but one can turn into profit very easily and in many sneaky ways. Also power in general (power to collect taxes, power to control law enforcement and army, or people with guns in general) is wealth that isn't quantifiable in monetary amounts. So in this system powerful people will be much more powerful because they will start accumulating all other forms of wealth, and very difficult to restrict — why would they use their power to restrict themselves? They would use their power to remove any restrictions at the highest priority.
So instead of the current system (people willing to invent new things and work overtime for years to bring value to millions of people for a chance of outsized returns — and sometimes earning them) you get a system where political class seizes all power, removes all checks and balances, redistributes wealth production to themselves, and unleashes violence to rule forever. It has been tried many times.
> Government employees doing as you describe would also be subject to severe penalties
This only works in capitalistic open societies where wealth doesn't concentrate with government employees.
> The purpose of policies like the ones I describe is to encourage people to start small businesses and keep them small
Not all businesses can be small. How can a small business construct an airplane? Organize a nation-wide or international postal delivery service? Build millions of cars with spare parts available for decades? Make food, clothing, and shelter for millions? These things require economies of scale to be affordable. And yes, government-managed big businesses have also been tried, they tend to be very unproductive, and produce expensive and low-quality items (with tendencies to significantly decline over years).
Sounds like a great way to throw the economy into a depression.
Wealth moves in lots of ways. Yes, as has been pointed out, we over value stock assets. When you own a significant percentage of a company, you can't just sell that ownership at the last trading price (the stock price would quickly crash). Wealth is also moved between national borders, allowing the wealthy to shop for the lowest tax location to stash their funds. Property can't be moved, but it can be financed with debt, making it taxed at effectively 0%. And the other side of that debt may just be an overseas shell company. There will be entire industries formed around avoiding a wealth tax, funded by the wealthy.
But probably the most capital efficient way to avoid the wealth tax is to buy politicians, influence the elections, and invest in lobbyist, which the wealthy do in the US to avoid taxes. Until money is removed from politics, I'm not holding out any hope that we'll find a way to tax the wealthy.
You likely live in a wealthy country - your wealth should be taken from you and given to a poorer country.
You don't deserve a car when there's people who don't have a bicycle.
It has been tried. Wealth tax means rich people (who already pay most of the taxes) are leaving the country, then the state gets fewer taxes, not more.
This unbridled greed has metastasized into a global existential threat, and needs to be aggressively eradicated.
Automatic thread spinning machines took the jobs of spinsters. Did the machines themselves pay taxes?
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.
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
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.
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…
In fact, we avoid a lot of difficult moral dilemmas because we accept the systems are crappy and just a necessary evil. The closest you claim to be to perfection, the more you have to acknowledge that some moral questions are just impossible to settle to everyone's satisfaction.
Is the life of child X more important than the life of child X because of a score calculated based on their grades, parents' income, etc? The system we have today may implicitly result in such outcomes, but at least it's not intentional.
OTOH, I don't more than partially agree.
We can stipulate that some kind of mathematical perfection is unattainable, sure. The discussion might then move to the feedback loops that detect the state of the State and offer stabilizing input.
Just saying ....
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.
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”.
The US dominates the commercial space in LLMs, but the EU is much further along in that too than may be immediately apparent.
What's your solution on that? (this itself is stupid populist move but underlying issue is a major one)
Actually, that sounds awesome, keep your AI out of here.
Why would taking scarce resources away from productive businesses and allocating to unproductive things be good for anyone other than government bureaucrats?
But feels like we're a long way from that right now.
Until you understand how something that counter intuitive happened, you should not speculate on how AI replacing current jobs will play out!
No?
Hmmmmmm.
The Industrial Revolution mostly ate mechanical labor and created more 'thinking' and knowledge worker jobs closer to the top of the stack. AGI goes after the information / decision-making layer itself. And it's unclear how much remains once those are automated.
Whatever you call it, jobs keep getting "stolen" by technology, and yet employment rates stay high and average living standard keeps rising.
I'm genuinely fascinated by how this keeps happening, decade after decade, and yet most people are convinced the opposite is happening. I'm old enough to remember this exact discussion from 50 years ago.
We all see and interact with jobs that did not exist 20 years ago, and many of us work those jobs. And yet... this knowledge is somehow compartmentalized away from future expectations.
If you want a theoretical framework for why this keeps happening, my thought is that unemployed humans are an unused resource. And capitalism is really good at finding ways to use those.
A: 250 years ago, 98% worked in farming. Today it's 2% (who produce more food!). Assume that the other 2% are at least twice as productive, and you get that 3% of the population now produces as much as 100% back then.
B: It's hard to directly estimate how much GDP per person has increased in 250 years. But the typical number economists get when trying is that it's 30x as big. Which means 3.3% of today's workforce produces as much (per person) as the whole workforce did back then.
Both A and B can be critiqued, but the precise numbers don't really matter for the argument.
If "every country" is in debt, who owns the debt exactly? ... (it's not real debt)
For an example of what unlimited borrowing and money printing results in, look up Germany in 1921--1923
(It was piss.)
If we took Elon Musk's money away and simply burnt it, that would still be a net win for society as a whole.
Money is a nations currency. It’s actually the people of that nations property and you only get a lease on it.
If you disagree then try to do something like ceding the land that you “own” to another nations and see how that goes
According to the economic notion of value, which is unique among definitions of "value" in being wealth-weighted, enshrining "mega gainz in brokerage accounts" as the ultimate social good while shrugging its shoulders at the plight of the ahem low-weight individual.
That's not really the problem, though. The problem is that rich people have most of the money and rich people care mostly about one thing: getting paid for being rich. That happens when assets go up.
Assets have a counterparty, so policy that pumps assets can do so by encouring genuine growth (difficult, unreliable) or by whacking the counterparty over the head (easy, reliable). Anti-consumer and anti-labor policy makes stocks go up, for example. NIMY policies make real-estate go up. Selling our industrial base to the Communist Party of China makes bonds go up.
Once rich people get all of the money (US gini is 0.83, are we there yet?) the objective function of the entire system shifts away from satisfying the needs of people and towards whacking counterparties of assets over the head. It's an ugly thing to see, once you know how to see it.
> bofadeez
Your name and arguments are both young-libertarian coded so let me take a shot in the dark at a personal appeal: the reason why houses are so damn difficult for you to afford is that you are the counterparty.
The purpose of a system is what it does.
EU in a nutshell.
Those two things cannot possibly be true at the same time. If wealth, energy, and leisure become unlimited, we hardly have a use case for taxes.
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...