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.
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.
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.
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).
That's the problem. AI has the same tax problems as corporations. But US corporate taxes are historically very low and easy to evade.
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.
(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.
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.
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/
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.
I used to like the phrase "that idea is deeper that it first sounds", but Enron Musk ruined that for me.
- 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.
If machines can make all the work, then, who owns the machines is the only relevant question.
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.
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?
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.
https://archive.org/details/ageofautomation0000sirl/mode/1up
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.
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.
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.
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.
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
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.
(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)
- Lewis Mumford, Technics and Civilization
https://www.npr.org/2014/07/28/335288388/when-did-companies-...
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.
If AI is generating wealth for someone, should we tax it?
> capital owners successfully avoid contributing to the financing of our states and social system
> 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.
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.
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.
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.
> 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.
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.
Ask yourself if this is a race you're willing to lose
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?
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.
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.
Another fundamental problem is that the means of production are concentrated into the hands of a few.
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.
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?
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.
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.
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."
starting your reply with an insult, great way to spark "grown up discussion"
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.
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.)
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...
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.
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?
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-...
Perhaps the more interesting bit is that you only seemed to have noticed it when it is asked about white collar workers?
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.
[1] https://www.cbsnews.com/news/income-taxes-billionaire-tax-ra...
[2] https://www.propublica.org/article/the-secret-irs-files-trov...
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?
social unrest must be priced in at this point somewhere
AI is on track to being able to remove a society-changing amount of jobs, wheel barrows improved worker's efficiency.
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.
That's unique in human history
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?
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).
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.
Don't tax tools or income, tax the accumulation of it: wealth.
With increased automation, this only gets more extreme.
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.
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.
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.
- And: lobbying their congressmen for tax cuts
This is exactly the kind of thing I was looking for.
Making capital gains taxes more progressive is a good first step.
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)
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.
[0] https://finance.yahoo.com/news/bill-gates-wants-tax-robots-2...
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.
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.
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.
AI is just the other pincer that will finish the kill shot.
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. 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)
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.
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.
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...
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.
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!!!
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?
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
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
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.
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.
In French we say "With "ifs" you can put Paris in a bottle."
Sadly not unique in human history.
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.
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.
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.
Problem solved.
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)
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.
I believe unfortunately it’s intractable because humans cannot successfully align incentives and actions at a scale large enough required to solve it
(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.
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.
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?
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.
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
On old people who can't or don't work.
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.
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.
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!"
Right, but you're ignoring the loop-hole OP mentioned where you borrow un-taxed money then deduct it. Kill the loop holes.
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.
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.
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?
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.
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.
Chances are half of humans would vote for it too
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.
It can’t be seen or touched, but it’s shaking up markets and attracting investment. Artificial intelligence (AI) has become the object of desire for Big Tech, which is pouring astronomical sums into its development, fueled by record profits. The other side of this frenzy is workforce reductions, with automation as the backdrop, announced by multinationals like Amazon, Meta, and UPS, which, incidentally, threaten to extend the impact of new technologies to another area: public coffers. Fewer people working means fewer taxpayers, so the question naturally arises: if machines and algorithms replace humans in their jobs, should they also have to cover the taxes that humans stop paying?
Labor, through income tax and social security contributions, is one of the pillars of the tax systems of almost all countries, and the impact of automation on the tax base — or, in other words, the potential decrease in revenue — is not a new concern. In 2019, Nobel laureate Edmund Phelps proposed a tax on robots to help maintain social benefits. Shortly before, Bill Gates, founder of one of the world’s largest technology companies, Microsoft, which has its own artificial intelligence (Copilot), had suggested applying the same tax burden to robots as would be borne by the workers they replace.
“The trend toward automation and AI could lead to a decrease in tax revenues. In the United States, for example, about 85% of federal tax revenue comes from labor income,” says Sanjay Patnaik, director of the Center for Regulation and Markets at the Brookings Institution. He suggests that governments address “the risks posed by AI” by increasing capital gains taxation rather than creating a specific tax on it, due to the difficulties in designing such a tax and the distortions it could generate. The repeated use of the conditional tense is because the impact of generative AI, the kind capable of creating content on demand, is still uncertain, both in positive terms — improved productivity and economic growth — and negative terms; job losses.
Even so, forecasts are mixed. Goldman Sachs, for example, estimates that AI will boost global GDP by 7% over the next decade; the IMF predicts it will contribute up to eight-tenths of a percentage point annually to growth between now and 2030. On the other hand, the International Labour Organization estimates that one in four workers worldwide, concentrated in high-income countries, holds a job with some degree of exposure to AI, but at the same time predicts that most jobs will be transformed rather than disappear.
“We know there will be an impact, but it’s difficult to quantify,” confirms Luz Rodríguez, a professor of labor law and a former Spanish Secretary of State for Employment. “The previous wave of automation affected employment in the middle of the production chain; generative AI is targeting higher up the ladder, more skilled jobs that require critical thinking,” she summarizes. “I’m not optimistic, but I am positive: there are jobs being created that wouldn’t exist without new technologies, such as content moderators on social media or Bitcoin miners.”
Daniel Waldenström, a professor at the Stockholm Institute for Industrial Economics, rejects the idea of a specific tax on AI, arguing that there has been no significant increase in unemployment, even in the United States, the birthplace of these new technologies and a leader in their implementation. He also emphasizes the difficulty in defining it precisely: “What are automation, robots, or AI? A chip, a humanoid machine, an application, or a computer program? We will never be able to define it precisely. We should continue taxing what already exists: income from labor, consumption, and capital gains.”
The International Monetary Fund (IMF) has also joined the debate. In a report published last summer, the organization’s economists reached a mixed conclusion: they did not recommend specifically taxing AI — as this could stifle productivity and distort the market — but urged governments to remain vigilant against potential disruptive scenarios. Their proposals included raising taxes on capital — which have been decreasing as the tax burden on labor has increased — creating a supplementary tax on “excessive” corporate profits, and reviewing tax incentives for innovation, patents, and other intangible assets that, while boosting productivity, can also displace human jobs.
Carl Frey, associate professor of AI and Work at Oxford University and author of the book How Progress Ends (Princeton University Press, 2025), holds a similar view: he does not support an AI tax, but acknowledges that the tax system has become unbalanced. “In many OECD economies, we have seen an increase in income taxes and a decrease in capital taxes,” he notes. This system incentivizes companies to invest more in automation than in job-creating technologies. “Addressing this imbalance is essential to supporting the job-creating technologies of the future.”
The recent moves by major tech companies and the evolution of tax systems in recent years justify this concern. Amazon, for example, has announced a 38% increase in profits and multimillion-dollar investments in AI, while simultaneously reporting 14,000 job cuts worldwide. Meanwhile, corporate tax rates have plummeted in the last decade in OECD countries, from 33% in 2000 to the current 25%; the tax wedge for workers — income tax and social security contributions — has decreased by only 1.3 percentage points in the same period, from 36.2% to 34.9%.
Susanne Bieller, secretary general of the International Federation of Robotics, argues that applying ad hoc taxes stems from “a problem that doesn’t exist,” since automation and robots “create new jobs by increasing productivity.” She warns that taxing production tools instead of business profits “would have a negative impact” on competitiveness and employment. “We need incentives for [European] companies to use technologies like robots and digitalization to remain competitive globally,” she concludes. “The world faces a labor shortage of approximately 40 million jobs per year [...] Robots cannot take over entire jobs, but they can handle certain tasks.”
In addition to employment, the soaring spending of major tech companies on AI and the surge in their stock prices are causing concern, raising fears of a bubble. Analysts also warn that the energy consumption of these technologies is so high that their climate footprint could offset the promised growth benefits.
In the best-case scenario, the new jobs created by AI could be “more productive, better paid, and more accessible,” offsetting job and tax losses, predicts Patnaik. However, the latent — and very likely — risk remains that the process will not be automatic. Job creation could be delayed, less-skilled professionals could struggle to adapt, and a gap could emerge between countries — and within them — and across productive sectors.
MIT economists Daron Acemoğlu and Simon Johnson warned about this in 2023. “Over the past four decades, automation has increased productivity and multiplied corporate profits, but it has not led to shared prosperity in industrialized countries,” they cautioned in a document for the IMF. “Technology and artificial intelligence produce social impacts that are relevant to politics. We cannot allow technological determinism,” Rodríguez asserts. “The debate is necessary, and we will go wherever we want to go.”
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My point is simply this: As automation advances, the vast majority of that value (e.g. 98%) should flow back to society. Right now it's being soaked up by capitalists. There should be a reward for improving efficiency but it should be sensible.
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.
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
We could, conceivably, learn from our mistakes and do something different now. But we're not.
Landfills full of broken robots is totally something humans would do haha
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.
https://fortune.com/2025/11/07/what-is-the-k-shaped-economy-...
All of what you said can be true and also others can and do decide to allow or disallow a group to exist.
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".
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.
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?
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?
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 ?
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.
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!
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?
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.
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.
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?
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.
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.
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.
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.
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?
Corporations don’t have to exist; they are a creation of society and thus can - and I think obviously- should be changed
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.
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.
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.
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.
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.
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.
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.
We have arrived to the point where capital is vastly more important and productive than labor. AI has only make that worse. Historically, there has been a balance because it was Capital and labor that were required to generate outsized returns. But once you strip out incremental cost with software, and tack on an AI "service" layer, where are the need for employees?
The one saving grace, is that this will also break the VC model. When one youtuber who has 100k subs can spin out 20 different apps a year, we fragment the app space, allowing alot of micro businesses to form around "brands". But "brands" will just be social media influencers.
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.
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 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.
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.
Alaska as a state managed to do just that and more or less has an annual UBI.
Workers do not benefit in increased compensation of any sort when AI increases company productivity.
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.
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.
Same as when one developer with AI can do the job of 3 developers and the other 2 are fired.
So the only way to pay less tax is to surrender all your assets.
If you have a lot of assets you can just refinance your loan with more debt.
This could be almost any tax system depending on the what one views as "fair".
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 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.
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?
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.
I would change my opinion if it could be shown to have the negative physical harm that your cocaine example implies.
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.
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.
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.
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.
https://taxfoundation.org/blog/value-added-tax-vat-progressi...
World Economic Forum: https://www.weforum.org/stories/2020/11/productivity-workfor...
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.
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.
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.
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.
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.
Tax on electricity is already a thing. That can be adjusted and even be made progressive. Extra for fossils and so on.
I heard that, at least in the US, you can avoid capital tax gain by just... never selling. Borrow against your wealth instead.
Not generally. Window repairmen get higher incomes, but the rest of the economy has less consumption and investment.
This basically defers the taxes to a later date and charges you interest for 'em. Which might be worthwhile, depending on how quickly and reliably your capital is growing.
If AI is so good that it can replace health and retirement care, then the price should fall to.
But basically, we would end up with AI and dark factories building gizmos to sustain and entertain humans and fixing them until they die.
I guess taxes at this point are irrelevant, AI could build new factories of factories, money would be useless.
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?
Yes this entire conversation is about the ultra wealthy not paying their "fair share". A $14MM exemption is practically irrelevant here.
> most large estates get reorganized into trusts with estate tax avoidance
This isn't so simple. Transfers to a irrevocable trust count against your lifetime 14mm estate and gift tax exemption and a trust in excess of the 14M exemption is subject to gift tax.
Also, this discussion was about "Buy Borrow Die" strategy. Irrevocable trusts don't make much sense in this context because trusts aren't subject to stepped up basis.
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.
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.
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.
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.
> […] 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.
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.
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?
Certain configurations of the corporation are described in our laws, e.g. "limited liability".
That's extremely interesting, can you link such studies?
“taxing the tool” makes me think of transaction taxes, like a tobin tax https://en.wikipedia.org/wiki/Tobin_tax
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.
That sounds excellent. Also water usage.
Really, AI has externalities and it should pay for it.
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.
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.
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.
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.
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.
I guess the other countries can slap sanctions on them, but the people benefitting won't care really.
What is the logic?
The value of labor is dependent on the demand of that labor and tools increase demand by increasing what projects can be done.
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 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.
I don't believe that's true. I believe that's called the "Broken Window Fallacy" in Economics.
Well, you still have to pay for the energy (to extract raw material and transform it into final product, and move final product into your hands). So unless we assume energy cost is 0 and raw materials are not scarce, the final product has a cost, and a price, now my understanding is that if everyone uses dark factories, the margin would go down, and so the gain per "company" would drop too, hence the limited tax base.
My guess is from the 2 ends of the spectrum that you listed, we are moving from "there is still work you need people to do, and then they do that, and still have jobs." to "we automate everything". And as we move to the "we automate everything" end of the spectrum, the number of jobs lost would increase, the taxes collected (VAT, income, capital gain, etc.) would decrease (assuming the current tax system) and yet people (employed or not) would still education, health care, social security (retirement).
If we do not change how we tax things, I do not see how we would sustain a society where the majority is materially (gizmos) rich, but financially poor (no job, no retirement, no social security, no education).
While dark factories keep producing high volume of gizmos for next to nothing...
I am curious how we can manage that transition, which I believe could happen way faster than politicians can move.
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.
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.
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.
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?
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.
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.
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.
You're welcome to make your substantive points thoughtfully.
Again: we can't even make a universal robot work in a sim with perfect sensor streams! If the issue was "universal robots work fine in sims, suffer in real world", then his argument would have had a leg to stand on. As is? It's a "robot AI caught lacking" problem - and ignoring the elephant in the room in favor of nitpicking at hardware isn't doing anyone a favor.
It's not like we don't know how to make sensors. Wrist-mounted cameras cover a multitude of sins, if your AI knows how to leverage them - they give you a data stream about as rich as anything a human gets from the skin - and every single motor in a robot is a force feedback sensor, giving it a rudimentary sense of touch.
Nothing stops you from getting more of that with dedicated piezos, if you want better "touchy-feely" capabilities. But do you want to? We are nowhere near being limited by "robot skin isn't good enough". We are at "if we made a perfect replica of a human hand for a robot to work with, it wouldn't allow us to do anything we can't already do". The bottleneck lies elsewhere.
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!
It's called Baumol's cost disease.
Wolves predate towns but we choose to not allow them in towns.
It's one of those things that can be tricky to research because almost all the researchers and journalists on the topic very much don't want to see this conclusion. So there's a tremendous amount of misrepresentation and wishful reasoning about how to interpret the data. The truth comes out from actually reading the data, not researcher or journalist summaries.
See this explanation and corrected graph: https://fraser.stlouisfed.org/title/economic-synopses-6715/w...
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.
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?
You seem to conflate and misunderstand a few things here. For one, capital gains are paid out from profits, so they leave the company's budget and are not part of investment.
Secondly, holding stock and stock trading has been immensely profitable, relatively low risk and require little if done reasonably and over long periods.
More and more studies are affirming that simply buying index funds and holding them over long periods is _less_ risky than buying bonds.
> Tax rates are carefully tuned to maximize tax revenue without unduly disincentivizing production.
They reflect power relations and tax competition more than anything.
> To change them purely based on vibes would be catastrophically stupid.
Not based on "vibes". The people who actually generate wealth are workers and consumers, not stock holders.
> Please don't vote.
We should mutually respect our rights to vote even if we disagree.
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.
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.
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.
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."
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?
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.
Clearly we're talking about a specific modern legal entity with a specific organization that, as you say, can change.
My grandmother was born in 1924 and died in 2019 please appreciate how much change she had to adapt to over that period
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.
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.
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.
But then you're back to having something that isn't automated. If machines do this then it's free. If you need people to do it then people have jobs.
> And as we move to the "we automate everything" end of the spectrum, the number of jobs lost would increase, the taxes collected (VAT, income, capital gain, etc.) would decrease (assuming the current tax system) and yet people (employed or not) would still education, health care, social security (retirement).
But things would also cost less, in the same proportion.
Suppose healthcare is 20% of the economy, can't be automated, and we automate everything else. Then tax revenue goes down by 80%, but so do costs, so people only need 20% as much in government services or those services only cost 20% as much to provide.
Meanwhile you still need people to be doctors and nurses but not other things, so more people become doctors and nurses. This drives down wages there, but that's fine when the doctors and nurses are also paying 80% less for everything. And at the lower wages you can justify more work to be done. More people do medical research, doctors get to spend more time with each patient, etc. Soon everyone has a job again.
Let's even consider the hypothetical where that can't happen. There are 8 billion people and only a million jobs. No other jobs are possible, somehow. How much are those million people going to get paid? Peanuts, because like everyone else they'd have negligible living expenses and they'd be in competition with 8 billion people for who would be willing to do it for the least amount of compensation. Their payment would be something like bragging rights, or all the slots would be filled by volunteers.
But in practice we would never "run out" of jobs because the supply curve always intersects with the demand curve somewhere. If demand goes down then price goes down because there is higher demand at the lower price.
In an ordinary competitive market, margins are thin because sellers are fungible, so charging slightly less than the competition results in a disproportionate increase in sales because customers are just choosing the lowest price, and then sellers keep lowering prices until margins are thin because it's more profitable to get a $0.05 margin on a thousand units than a $0.10 margin on a dozen units.
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.
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.
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.
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.
So, ensure competitive markets by thwarting regulatory capture and enforcing antitrust laws.
Corporations pay taxes on profit. Shareholders pay taxes on dividends and capital gains.
Are you serious? I live in country where we are not using Amazon.
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?
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
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).
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.
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.
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.
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.
If you want to live in the best real estate in the world and expect to continue doing so when you have no job, that's not going to happen. If you're willing to adapt and spread out you can live better and freer than ever in a hypothetical world where AI has taken most jobs.
I put the onus on the yay-sayers, can you name a job that a human can do that this new AI / robot cannot (or will not soon) do? Otherwise, I think its time to stop drawing false equivalence with agriculture, luddites, etc. Those were "narrow" machines, incapable of coding, writing a symphony, or working in a factory. In the next decade we're talking about building a better human.
I think a better example is to draw a parallel to horses. There is nothing left for them to do; we keep a few around for sport and entertainment, as a novelty. At one time, they were indispensible, but there's no rule that any organism (including humans) has infinite economically viable uses. At some point, everything worth doing (economically) might be automated to the point that human labor no longer makes sense (and hence we have high unemployment). There is no cosmic law written that "if jobs are replaced by tech, new jobs shall fill the space!" Just look at areas in the rust belt where literally nothing replaced the lost jobs -- there is just rampant unemployment, black market dealing / drugs, and despair.
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.
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?
Seems sensible. I remember when W reduced capital gains rates. I think they used to be closer.
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.
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.
What is it capable of generating in real profits? Yet to be seen.
- 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).
> 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.
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.
Automation drives goods toward zero while destroying the wage base, as Ricardo warned: gains flow to owners (das capital) of scarce resources. Today that’s Ricardian rents on land, housing, zoning, healthcare, education. $2 TVs ain't gonna pay rent.
Antitrust decides who captures surplus, not how people access it once wages stop working. And UBI would just be stapling cash onto a broken distribution system. So what actually replaces labor as the primary claim on surplus?
Not sure to follow, machines need energy as input. So unless energy is free and unlimited, even if the machines run without people, there is a cost for the products. It is not free, even if that is 100% automated. At the very least you have to pay for the energy, if not for the raw materials.
> > And as we move to the "we automate everything" end of the spectrum, the number of jobs lost would increase, the taxes collected (VAT, income, capital gain, etc.) would decrease (assuming the current tax system) and yet people (employed or not) would still education, health care, social security (retirement). > But things would also cost less, in the same proportion.
Yes, things (material) and services would cost less. But still cost the energy to produce those things and services.
> Suppose healthcare is 20% of the economy, can't be automated, and we automate everything else. Then tax revenue goes down by 80%, but so do costs, so people only need 20% as much in government services or those services only cost 20% as much to provide.
Not sure why healthcare would not be 100% automated, but for the exercise, let's assume it still needs some people. Unless you also assume that unemployed people could get some ABI or SNAP from government (in US already 1 out 8 adult receives SNAP) to pay for food (cost less with 100% automation, but still cost the energy for fertilizer, tractors, transport, transformation), for shelter, etc. and pay for healthcare.
I am not sure if the gov lose 80% of its tax collection, it could sustain the population basic needs.
> Meanwhile you still need people to be doctors and nurses but not other things, so more people become doctors and nurses.
Not sure why we need doctors or nurses ? Doctors are mostly a sensor + decision tree... that speaks to the patient. I could see doctors and nurses to disappear eventually. It might take longer for robots to do surgery, but it should eventually come. So the cost should drop. Drugs manufacturing should be 100% automated too. Lab work automated.
> This drives down wages there, but that's fine when the doctors and nurses are also paying 80% less for everything. And at the lower wages you can justify more work to be done. More people do medical research, doctors get to spend more time with each patient, etc. Soon everyone has a job again. Let's even consider the hypothetical where that can't happen. There are 8 billion people and only a million jobs. No other jobs are possible, somehow. How much are those million people going to get paid? Peanuts, because like everyone else they'd have negligible living expenses and they'd be in competition with 8 billion people for who would be willing to do it for the least amount of compensation. Their payment would be something like bragging rights, or all the slots would be filled by volunteers. But in practice we would never "run out" of jobs because the supply curve always intersects with the demand curve somewhere. If demand goes down then price goes down because there is higher demand at the lower price.
I guess the disconnect, for me the end of spectrum, is that all the products and services could eventually be 100% automated without human in the loop, expect for consuming the products/services. Those 100% automated product manufacturing or services, would cost energy (electricity basically) and raw material (arguably free, just need to pick it up on the ground using some energy). So, one machine would build everything and all services, with just energy as input. If energy is not free, then products and services would cost something. How people pay for product and services ?
[1] https://www.fidelity.com/learning-center/life-events/cost-ba...
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.
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.
Like sure all the goods are stupid cheap but things that are actually naturally rivalrous and exclusive like real estate continue to hold value most random people are pretty fucked it seems.
We would need to find a way to give money to people so they can keep participating in the economy even though everything is cheap. If not UBI, we would need to find ways for the majority to do something that is not automated, and give them some coins in exchange.
For millennia the currency has been energy (human labor, then machines) and intelligence (human intelligence, then artificial intelligence). If energy and intelligence price goes down, and the amount of energy and intelligence increases, then what is left for humans to claim some reward/coins ?
The preamble of the U.S. Constitution literally states that part of its purpose is to..."promote the general Welfare."
By the local municipality, not the federal or state government.
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).
> 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?
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.
Compare like to like. Mean productivity increase tracks mean wage increase super well, same for median productivity increase vs median wage increase.
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.
I completely agree you then. I think people arguing for wealth tax severely underestimate how many edge cases and loopholes there are.
Unfortunately this doesn't work for individuals: tax codes in, well, every first world jurisdiction, are very clear that any money going to an individual for their exclusive use is taxed.
I operate as a consultancy (registered tax-paying business); If I use my revenue to pay my bond or get surgery, that $amount is considered personal income even if the company pays for it.[1]
The real problem is that corporations are taxed on profit and individuals are taxed on revenue!
All the costs that a corporation has to foot just to remain in existence is tax-deductible. All the costs that an individual has to foot to remain in existence is taxed (double-taxed, in some cases).
A corporation that pays $amount for rent won't pay tax on $amount in income, while an individual who pays $amount in rent is taxed on the $amount in income.
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[1] I hear what you are saying about a loan that is paid back, and maybe that is one loophole I can explore, but the revenue services have seen all "hacks" and this is no doubt one of them. This is why the tax codes are so complex and convoluted - each time a hack is discovered, a new code is added to specifically shutdown that loophole. The only remaining "hacks" are those that are allowed anyway by the overall tax policy, like "individuals are taxed on all revenue, corporates are taxed on profits only"
Yes, it took some time to go from manual/animal labor (energy used is food) to mechanical labor (mostly oil energy). And oil is more energy dense than food, and tractors are more powerful than horses. And bonus points for the oil, it allowed to build fertilizers to boost productivity per acre. So, yes eventually we just need 2% to do what what 95% used to do in farming.
AI is promising to do the same but in virtually all industries (manufacturing, services, healthcare, etc.) and in a way shorten span.
Work used to be labor (human/animal) fueled by energy (food) + intelligence (human) fueled by energy (food), then labor (machine) fueled by energy (oil/electricity) + intelligence (AI) fueled by energy (electricity).
IF work is mostly done by AI/machines fueled by energy. Then work's price is mostly a function of energy price (assuming materials can be extracted/transported/transformed is also a function of energy).
If energy becomes abundant and cheap, then there is no reasons to not let AI do the work.
But then what happens to the rest of us, how the economy keeps humming ?
But yes, if we develop artificial superinteligence to the level where humans become literally useless (e.g. we don't just automate 90% of everything, but 100%, and there's actually no tasks left in the world that humans can do better or cheaper than computers) then assuming humanity survives we'll need a different economic system for distributing the nearly-unlimited resources resulting from that. Probably in that situation the best thing to do would be to ask the AI to design our new economic system, since it would obviously do a better job at that than any human.
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
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).
Labor is essentially the sale of time. If labor becomes cheaper then energy/matter becomes the bottleneck. Except that there is actually quite a bit of energy and matter in the universe and the main bottleneck on collecting more of it is labor, so if labor gets cheaper then so does energy and matter.
The things you're pointing to are the things that are artificially scarce. How expensive is a housing unit if you can build a 100 story building on any lot and the labor to do that is cheap? Now how expensive is it if building tall buildings is banned and there is an intentional regulatory bottleneck on more people getting trade licenses?
If you still need human labor to build housing then people can get jobs building housing until housing gets cheap. If you don't need human labor to build housing then housing would already be cheap. Unless you have the government artificially constraining the housing supply, in which case you need to fix that. And the same thing for medicine and education.
I included options because that's how ultra wealthy get their wealth from and it has market value of 0 so company could give lot of them.
Also anyone can get majority of your earning in stocks, not just ultra rich. Companies want to pay in stocks, and it's a win win for both, if there is a loophole.
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.
But where does energy come from? You would have machines that can make solar panels and install them and operate a power grid, or people would still have jobs doing those things.
> Unless you also assume that unemployed people could get some ABI or SNAP from government (in US already 1 out 8 adult receives SNAP) to pay for food (cost less with 100% automation, but still cost the energy for fertilizer, tractors, transport, transformation), for shelter, etc. and pay for healthcare.
If everything other than healthcare was automated then energy production, fertilizer production, tractor production, transportation, etc. would all be automated.
If everything is automated then everything is free. If there is still anything that can't be automated then people still have jobs doing that.
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
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.
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.
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.
Delivery should be automated.
Rent would obviously crater as building housing craters too (robots making it, materials being extracted and manufactured by robots too). But again, it would still cost something (energy at very least and assuming energy is not free).
So I suspect that even if 100% is automated, we would still need little money to pay for the basics (food, shelter).
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?
Apartments aren't land, they're buildings. Buildings can be made arbitrarily tall; if we built tall buildings we'd have more housing units than people long before we ran out of land.
So if there is a machine that can build buildings for free, apartments should be cheap. If there isn't a machine that can build buildings for free, get a job building buildings for money.
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.
Money is an abstraction, so prices are always relative to wages. If prices go down, that's equivalent to wages going up. If your costs are $1000 and your wages are $1000, that's the same to you as if your costs are $100 and your wages are $100.
So the problem solves itself. You previously needed a job that would pay you $1000 to cover your costs, now you only need one that pays $100. And there is still $100 of work that needs to be done, because that's why things cost $100 instead of $0.
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.
And no, taxes don't just magically benefit everyone. It's actually the point of them, that they are redistributive.
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.
(Different environmentalist group, different time)
AI can calculate stuff that can be measured and calculated.
But investing (in stocks or otherwise) is not that. Investing is about the phychology of the people (all other investors). If investors as a whole make stupid decisions, the market movements make their decisions correct (like the incredibly stupid drop in Nvidia's stock due to release of Deepseek). AI can be more objective and better at calculating facts, but it doesn't matter if the market is driven by emotions and people.
(I'm happy to be wrong about this, since it seems unfair, but AFAIK this is how it works?)
That is the meat of it. Zoning laws are why every city doesn't look like Hong Kong, even if it cost $1 to make a sky scraper. There are artificial limits on supply of doctors, and we don't pay teachers enough which is a whole other topic. If that's what we have to fix in order to make progress, I'm suddenly doubtful of how much progress will really be made in the face of the singularity.
I replied to GP with the same thought as you, but I think there might be some merit in the "loan" angle.
Lets look at the case that you operate as a consultant/contractor/etc. Your "startup" starts making some very large revenue, and you'd like to use that money to pay rent, go on vacation, pay for surgery, etc.
Any money (say, $amount) the business pays on your behalf (hospital, landlord, etc) is considered your personal income and taxed appropriately.
But, if the books reflect that it was given as a loan, and you are now on the books as a debtor (with the business being your creditor), then that specific $amount isn't taxed as your personal income (loans aren't considered income, as far as I know, because they are a liability).
So, as long as you are in control of the business, the business doesn't need to initiate the "pay back now or we start legal proceedings" process. What instead happens is that this loan amount in the business books just grows and grows (interest accumulates) until the business dies/ends/is sold without ever collecting on it.
As long as the business itself does not have outstanding creditors when it eventually comes to an end, that "loan" can be just written off.
What's the revenue service going to do? Claim that businesses can't write off debt anymore?
Ok, appreciate the clarification. But in that time frame there have been a number of really tectonic inventions that changed pretty much everything: steam power, ICE power, electrification, refrigeration, computing and the internet, just to name a few off the top of my head.
> 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)
Same. I am both optimistic about human ability to find new jobs, and skeptical that "AI" is going to make that necessary in the new future.
My job title did not even exist when I was born.
Even if 100% automated, there might still be a residual cost to building as it needs energy (assuming than raw material is free). I do not think that because the building would be not free, it would allow human to compete (too slow, inaccurate, etc.)
Literally, the First Congress made up almost entirely of Founding Fathers passed laws regulating dangerous things...
If you want to use a nonstandard definition to suit your own ideology you're free to do so but don't expect others to join you.
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.
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.
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.
There's a distinction between capital and labor when the terms are used in an accounting sense but when "capital" is used as a shorthand for a class of people, there isn't. Once someone starts talking about "actual workers" vs "owners of capital" they're drawing that distinction.
No, I don't, because I don't spend 100% of my income every year on income-tax applicable goods. A good chunk of my income, even that which is taxed with income tax, goes to other things (like my mortgage, other investments, groceries, savings accounts, charitable donations, etc.) that either defer paying sales taxes or have no sales tax applied.
Meanwhile other purchases have extra sales taxes applied such a liquor or hospitality taxes.
Even if the cost for food and shelter is $1 per month, if there is no revenue, it is still too expensive, right ?
I am trying to understand the speed comparison between how fast the prices will go down, vs. how fast people will lose their jobs. If job loss goes faster than the price decrease, we might have a problem to solve.
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.
Why?
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.
Where displaced workers will go though is not something that can or should be planned out in a centralized fashion, because the best answer to that question is different for each individual and depends on their skills, preferences, and life situation, balanced against the needs and desires of other consumers in the unimaginably complex web that is the global economy.
Despite not knowing exactly where everyone will end up though, I think I can still be confident that they will find something, because the incentives to do so are very strong, both on a personal level (needing to find work) and the entrepreneurial level (finding useful things for displaced workers to do could make you very rich).
As another commenter put it a while back, unemployed workers are an unused resource, and the economy is very good at finding uses for unused resources.
The reason every city doesn't look like Hong Kong is that Hong Kong has a population of 7.5 million and a US city is considered "large" if it has 50,000 people.
Zoning laws are why every city doesn't look like Lubbock or Boise, which is hardly a problem.
> If that's what we have to fix in order to make progress
That's what we have to fix in order to make progress. It is what it is.
I am wondering if we are touching on a human biological limitation. Human are adaptable and flexible, but there is a limit to that flexibility. Some sort of biological limit on how fast we can turn around.
The technology acceleration is increasing, and I am wondering if there would be a point where the technology would evolve faster than what human biology can comprehend.
1,000 years ago, anyone could pretty much build or fix the current technology (anyone could fix a cart). 50 years ago, a majority of people could build or fix the current technology (e.g. most could fix a car). this year, a limited number of people can build or fix the current technology (e.g. how many people can fix a self driving car?) 10 years from now, a very limited number of people if any could build or fix the current technology (e.g. explain how is AI doing this thing?)
If AI evolves at the same pace, and replacing labor (robots) and services (AI), I am not sure that human would turn around? How do you think we can turn things around ?
Education ? but we are reaching the limit already of how much technology we can teach in a student lifetime. Now we could argue, that one does not need a PhD in computer science to use AI, but eventually do we even need someone to use AI ? Would AI be cheap and pervasive enough that AI would drive AI would drive AI... why would you add a 20W analog brain in the loop ?
What activity would require human involvement ? Genuinely curious how the technology acceleration in general and AI in particular would affect the economy.
Why would there be no revenue? Right now you need a job that pays at least e.g. $2500/month to afford basic necessities. If those jobs disappear but the cost falls to $1/month, you don't need those jobs, because a job that pays $3/month leaves you in fat city, much less one that pays $50/month.
> If job loss goes faster than the price decrease, we might have a problem to solve.
That would be a transient problem while the prices catch up, not a long-term problem. You could solve that by e.g. printing some money in the short term.
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. )
And that's the point. The problem isn't caused by automation, it's caused by zoning restrictions.
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.
Like with any tax, I'm guessing the rate would change if the county's revenues didn't match their expenses?
I see no indication that we are close to building a GAI, or that we are close to solving the hallucination problems that severely limit the utility LLMs without human managers. We don't understand how our own intelligence works, or even an ant's. The notion the we are close to replicating or exceeding it seems far fetched to me.
> What activity would require human involvement ?
Nurses, bar tenders, barbers... Hasn't anyone read Player Piano? :)
> How do you think we can turn things around ?
I dunno. Did anyone know how dangerous fire or deadly spear points world work out?
And again, I remain skeptical that general artificial intelligence is actually that close at hand.
Think for a second. What kind of household spends every penny they make? Which one maybe manages to toss some money into savings every month? Which one doesn't even come close to spending their income?
Which household here pays the highest effective tax rate?
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.
My property taxes have practically only gone up over the years, but the tax rates from the various entities have mostly trended downwards.
Keeps people honest (enough).
Suppose you own a company and you have a trusted friend. The company, not the owner, enters into a contract with the friend that gives them the right to buy all the company's assets for 1% of their value, if the friend can satisfy a condition that they could only satisfy with the cooperation of the existing owner. Then the owner declares that the company is only worth 2% of its ordinary value -- which might even be an overestimate given the risk that the friend could execute the contract. If the government exercises the option to buy the company, they get a company bound to an obligation to sell all its assets to the friend, and then the previous owner cooperates in satisfying the condition in exchange for the friend giving them the assets back.
"We'll ban that", you say. But then they'll be more subtle about it, and the only way to really catch them is to have a good way of determining the true value of the company, which was the original problem.
You also run into trouble with that one because people can play that game the other way. You have an asset which on paper should be worth around a million dollars, but its value has already been hollowed out or de facto assigned to someone else without actually transferring the asset. Then the owner declares that it's worth $400,000 and the government pays them $400,000 thinking they're going to make $600,000, only to find out that it's actually worthless.
You're still designing a system where the highest effective tax rates are paid by the lowest income people and the lowest effective tax rates are paid by the highest income people. You've pointed to nothing that changes this truth.
Caps that are set to the amounts where people start having enough money to hire a tax accountant and thereby use the various other ways of deferring income tax on money you're not immediately spending.
> You're still designing a system where the highest effective tax rates are paid by the lowest income people and the lowest effective tax rates are paid by the highest income people.
The status quo is even worse: They not only defer income tax on the money they're not spending, they defer it on money they are spending, by borrowing against the assets and spending the loan. Which a consumption tax would have them paying.
Meanwhile you can exempt necessities from a consumption tax to various degrees or issue a large fixed tax credit to everyone, which lowers the effective rate on ordinary people by as much as you like.
> Meanwhile you can exempt necessities from a consumption tax to various degrees
So, a non-uniform sales tax. So not the thing you were arguing for just a few comments ago.