Americans are hanging on by their fingernails in an economy that funnels wealth to the ultra-rich and leaves crumbs for working people. AI threatens to supercharge this divide: tech executives have warned that AI could lead to “a level of wealth concentration that will break society” and create a “permanent underclass.”
I refuse to accept that future. Building an economy that works for all of us will require multiple policy responses. But it starts by acknowledging: it’s time to tax AI and invest in people.
AI holds tremendous promise. At the same time, Americans are rightly concerned that AI could further rig our economy. The technology is creating dozens of tech billionaires, while companies are laying off workers in the name of AI. Meanwhile, AI data centers are jacking up utility bills; for families living near large data centers, electricity costs have skyrocketed by as much as 267% over the past five years. It’s no surprise that Americans are showing up at town meetings to protest data centers and communities across the country are fighting for data center moratoriums.
Big Tech CEOs say this is only the beginning, predicting that AI will soon automate most white-collar tasks. Yes, some of this may be hyperbole. But there is no denying that AI is already changing the labor market. And because health care is often tied to a job, an AI wave could cost a family more than a lost paycheck. Even those whose jobs and insurance remain intact could be hit: experts warn that the hype around AI is fueling a financial bubble that threatens another economic crash.
Policymakers undoubtedly need to regulate AI and protect against its worst-case harms, like cyber attacks, which could impact our financial system and national security. We must also tackle the problem of AI’s accelerating demand for energy and ensure that families’ utility bills don’t skyrocket. And we need greater scrutiny of the murky world of private credit that finances a big chunk of AI deals so they don’t topple our economy.
But any response to a looming AI crisis must also tackle our rigged tax code.
Taxing AI is one way we make sure the winnings from AI benefit all Americans, rather than channeling them only to the wealthy few. If millions of people lose their jobs to AI, we’ll need the funds to deliver universal health care so those workers are not bankrupted by a visit to the doctor. If AI transforms the future of work, we'll need to invest in free education and apprenticeships and a new jobs guarantee so that all Americans have good-paying work. And while workers get back on their feet, we’ll need the revenue to bolster unemployment insurance to keep families afloat. The only way we can get there is by overhauling our tax code.
We can start by making corporations pay their fair share. Right now, companies pay payroll taxes for their workers but get tax breaks for investing in technology—effectively, a tax penalty for hiring human beings and a tax break for buying equipment. In an AI world, that means our tax code is incentivizing corporations to fire people and replace them with AI. That’s wrong. We need to level the playing field by raising taxes on corporations and capital gains and closing corporate loopholes. One way to tackle those loopholes? Strengthen the minimum tax for billionaire corporations, which I helped pass into law.
But there’s more. Some of the wealthiest individuals in America get away with paying lower tax rates than a Boston public school teacher because our system taxes income but not wealth. AI billionaires are running the same playbook: get rich off massive stock valuations and avoid paying the taxes that would be owed if those funds were earned as salary. If it wasn’t clear before, there’s no question in a world of AI: we need a wealth tax. Jeff Bezos and Sam Altman shouldn’t pay lower tax rates than the workers they fire.
Rethinking our tax code must also include going to the source: that means taxing AI companies directly, which can start with taxing AI data centers. The majority of AI data centers are controlled or operated by trillion-dollar companies. By imposing a reasonable excise tax on the energy used by data centers, families could recoup some of the gains of AI, while America continues to stay competitive in the AI race. A well-designed tax would focus on the companies that can afford it and scale with AI’s impact: the bigger the data center, the more they pay.
We can't be afraid to consider even bigger and bolder proposals to tax AI too, including ideas that sound radical today but may quickly become common sense. Because here’s what I see clearly: if we overhaul our tax code and tax AI, we can use that money to build a country that works for everyone. A country where health care is treated as a human right, where every American is guaranteed a good job, and where education isn’t a privilege reserved for the wealthy. That’s what I believe taxing AI promises.
AI was trained on human creativity and intelligence, AI was funded in part by federal investments in scientific research, and AI is powered by data centers that are built on American land and use our shared electric grid. The American people deserve to share in the success of this technology. And I’m willing to work with anyone to get it done.
