The bill to tax A.I. tokens

When Bill Gates warned of the dangers posed by A.I. this week, he also weighed in on a somewhat obscure debate among politicians and economists about the best way to tax the technology. Gates suggested taxing A.I. tokens.

This month, Representative Greg Casar of Texas, who chairs the Congressional Progressive Caucus, proposed a bill that would create such a tax. DealBook spoke with him about the plan and how A.I. has become a hot political topic.

At a basic level, how would it work?

We have two measurements of how much A.I. companies are selling. One is the tokens, which is the unit of measure they currently use to sell A.I. The other is revenue on A.I. sales. And to prevent them from gaming the system by rapidly changing the definition of a token, we tax the higher of those two.

The tax starts out quite low, when we don’t have A.I. mass unemployment, and then ramps up if A.I. starts to cause significant job loss.

People in the business community will say taxing A.I. tokens would slow down A.I use and make it less efficient. You’ve written that this would be a feature, not a bug. Why?

During the Industrial Revolution, we needed new child labor laws. In the nuclear revolution, we needed nonproliferation agreements and the Nuclear Regulatory Commission.

A.I. could be extremely disruptive to our economy. So the best thing we can do is get rid of the incentives to automate our jobs, and give workers the time we need to make sure that we don’t have mass unemployment.

But don’t we have to keep up with China?

Becoming more authoritarian like China, accepting major national security risks or being a country with mass unemployment to me does not sound like leading the world.

Many economists have argued that taxing an input to businesses, their A.I. tokens, is less efficient than raising corporate taxes, which would still allow companies to maximize their profits with A.I. before taxing them. Why is a token tax the best way?

By taxing A.I. directly, we tax something that would grow as unemployment grows, so we’re tying the solution to the problem.

If companies are using more A.I., we’re able to fund more and more jobs. Corporate profits could be related or unrelated to the A.I. itself.

Why funnel the tax income to support a new Work Protection Administration, which would fund new jobs, rather than broadly distribute the funds, which is favored by proposals from Senator Bernie Sanders and others?

I find a small universal basic income for everyone dystopic. Americans want to contribute. We want Americans to still be at work and still have a job.

I’ve been discouraged by the sole focus on job training as the response to mass unemployment. That would be like offering swimming lessons on the Titanic.

There are no federal A.I. regulations. Why?

Many of these A.I. billionaires, like Greg Brockman over at OpenAI, are threatening to spend unprecedented amounts of money in the midterm elections. And they’re trying to capture Trump’s Republican Party and to make the Democratic Party afraid to take them on.

A.I. is increasingly becoming a big issue in the midterm elections, especially as it relates to data centers. But I think it will move from a big issue to a very top-level issue in a 2028 presidential campaign.

By Sarah Kessler