Tax Consumption, Not Income or AI, for Prosperity
• Prominent US politicians and economists are proposing increases in capital and corporate income taxes, or special taxes on AI, to fund social programs and address AI-related disruption, but these ideas are considered misguided.
• The author argues that if additional tax revenue is needed, it should come from taxing consumption, as taxing income and investment reduces incentives to save and invest, hindering productivity and living standards.
• A shift to a broad-based consumption tax, potentially a value-added tax (VAT) that exempts lower-income households or replaces existing income taxes, could raise revenue while increasing living standards.
• The current US income tax system is described as economically and structurally broken, with a narrowed base, high marginal rates, and discouragement of risk-taking and saving.
• Policymakers should avoid ill-advised obstacles like AI-specific taxes or higher capital/corporate taxes, as AI is expected to boost productivity, wages, and living standards, and addressing disruption should focus on spending, not revenue.
Posted by technocraticnihilist
2 Comments
Makes a lot of sense, good luck trying to get people to vote for it
I guess I’m not surprised, but people are proposing taxes specifically on AI?