AI employees don't pay taxes

https://alec.is/posts/ai-employees-dont-pay-taxes/

by arm32 • 7 months ago

108 155 7 months ago

quantified4• 7 months ago

There is no credible model for UBI anywhere from AI. It's not going to be paid for by anyone, anywhere. Petrostates including Alaska can pay one, sort of, but they are not replacing people with automation, and their largesse won't last forever.

The model of capitalism is to pay for labor and avoid taxes and fees at almost all costs. AI-enabled businesses will not seek to contribute any more to UBI than they seek to contribute to any other non-employee. People who don't labor won't get money.

arccy• 7 months ago

just change the tax code to be progressive based on earnings per employee...

BobbyJo• 7 months ago

Over the long term, earnings per employee should shrink due to competition. So, a tax like this, can only be expected to generate significant income in emerging industries, where competition isn't as tight. IMO that would be bad for technological progress.

I think the core issue that needs to be curbed by the government is anti competitive practices, like Google and Meta buying out competition in infancy, as thats the kind of thing (monopoly) that keeps earnings per employee high longer term.

nerdponx4• 7 months ago

As if we needed more incentives to suppress wages

quantified4• 7 months ago

Can you explain the mechanics of this? Fewer employees means higher tax?

zwnow• 7 months ago

The model of capitalism is to use money to build some means of production and hopefully generate more money from that.

We are arriving in a form of techno-feudalism where nobody produces anything. People with means to produce will pay the owners of AI who just own and make money through renting shit to people who cant afford building their own data centers or whatever. Its what companies like Amazon or Microsoft already do. They dont produce, they own and collect.

All of this has nothing to do with capitalism, its all about selling the big AI lie to producers so people base their products on some AI they dont own. And the cycle repeats, Amazon squeezed actual producing companies out of their money decades ago and now we will repeat this with AI.

Capitalists have means to produce, feudalists just collect and own.

xyzzy123• 7 months ago

Most businesses get their inputs from suppliers and add value to produce an output.

Even if you could afford to build your own datacenters you could not make the chips. Any realistic business will have a web of suppliers.

I think before you can diagnose "feudalism" you need to think really carefully about who has power in what parts of the value chain, and why. This will be specific to the business you are in.

I agree, it is a real problem if your suppliers are acting in a monopolistic or market distorting way.

quantified4• 7 months ago

Capitalists have means to produce, feudalists just collect and own.

I think I get your distinction, but I think reality doesn't sort itself that way. Strictly, the means to produce is the factory, the land, something tangible that effects transformation, while money is just "finance". Capitalists are owners, though, and capitalism is ownerism. "Capital" is conventionally just money.

lovich6• 7 months ago

Why is it that every year we are capable of producing more, but we keep asking people to accept less?

Like how is “we can replace all workers with AI agents” not compatible with “we can extract enough wealth from the new profitability to sustain everyone at the current rate as a service(UBI)”

If we’re more productive after replacing everyone with machines then why can’t we just cover everyone’s basic(victuals/housing/basic utilities+internet) needs?

lazide• 7 months ago

Until people stand up and start setting things on fire, what else do you think is going to happen?

nerdponx4• 7 months ago

I'm not sure if you're being facetious, but the answer is that the same mechanism that incentivizes all of this innovation prevents the gains from being distributed evenly. You can get fabulously wealthy if you can be an early mover in bringing important new technology to the market. But then you get to keep that wealth and you don't have to share it with anybody if you don't want to. So that's what ends up happening. There's probably a correct balance somewhere between incentivizing innovation and redistributing income and/or wealth, but then it's hard to preserve that balance because the wealth seekers always have an incentive to lobby for favorable policies, manipulate markets, etc. I do not believe that we as a society have managed to figure out the necessary institutions that could preserve such a balance on a multigenerational time scale.

twoodfin6• 7 months ago

We don’t ask people to accept less, quite the opposite:

https://fred.stlouisfed.org/series/A229RX0

kiba• 7 months ago

LVT is AI proof. Severance taxes taking care of diminishing natural resources such as oil and the revenue can then be reinvested in the economy.

pensatoio• 7 months ago

What a weak argument against the “it’s just a tool” defense.

websiteapi2• 7 months ago

ubi just doesn't make any sense. case in point is the overwhelming negative response to the laptop 4G program in NYC with the Chromebooks. virtually every comment said it makes more sense for such a thing to be means tested and it was a waste of money since most people already had internet at their house. how ironic - if that's the attitude on this forum of all places about table stakes, imagine the reaction when you give rich people thousands of dollars a year for food. ubi is DOA.

nerdponx4• 7 months ago

The flipside is that some corporation is getting a massive handout for a technology contract like that, and the actual utility benefit to most people is low. You could spend the same exact amount of money directly on UBI cash and be much more effective by letting people spend money on whatever they need.

TheCleric2• 7 months ago

Means testing has its own issues. How do you decide what the lines are? How do you design it for people just outside those lines that keeps it fair? Who enforces it? What happens when your means change?

Figuring all this stuff has a cost, both real (now you have to hire people to screen and enforce the means testing) and emotional/political (news story about a single mother who was rejected for making $1 too much).

So when advocating for means testing please keep in mind it’s a lot easier to not have it. Yes some who don’t need it will get it, but that can be better than a ballooned cost and some who do need it being blocked or dissuaded from getting it.

tdeck• 7 months ago

A lot of the interest groups arguing for means testing on public benefits actually don't want those things to exist at all. Adding means tests to them is a way of making them more and more inaccessible while claiming it's simply about fareness. It's a deliberate strategy.

websiteapi2• 7 months ago

the reality is you can't just give things to everyone. the cost is just not sustainable.

spankalee• 7 months ago

What is the world is an "AI employee"?

amelius• 7 months ago

It's an employee that has been replaced by AI.

reustle• 7 months ago

Maybe we should tax computers entirely

https://en.wikipedia.org/wiki/Computer_(occupation)

aziaziazi• 7 months ago

I guess something like a Dishwasher employee or a Truck employee.

echelon• 7 months ago

Currently, companies employ humans.

Companies pay payroll taxes and employees pay income taxes. The state makes money to pay for social services.

When companies begin replacing humans with cold, dead infrastructure, that infrastructure doesn't pay taxes. Payroll and income taxes revenues are gone.

Furthermore, those humans aren't making an income with which to further stimulate the economy. They can't pay for the goods and services of other companies. No sales taxes. Consumer businesses lose revenue. Then no servicing businesses. B2B then sees second order pullback. Then those employees... The whole economy's interconnectedness and ecological food web begin to disappear if this happens.

I have no idea what the future holds for post-AI society. I tend to be much more positive in my outlook of this technology than most, but it truly could diverge from our predictions in unexpected ways.

Elon saying (paraphrasing) "everyone gets super wealthy because of AI" seems unlikely. You see how we treat homeless people. I do think we'll wind up on median/average wealthier and with less work, but that's not a given.

The really dark view is that we'll have massive concentration camps and human genocide for poor people (read: us) or all humans (if ASI happens), but that seems even more fantastically fictional.

We should start thinking about taxes and employment now, though.

emodendroket• 7 months ago

Yes, but the idea of demand for a given type of labor falling due to automation isn't a new one and it's not clear what this "AI employee" framing gives us over thinking of it in those terms.

rvz• 7 months ago

AI agents that replace employees and can be deployed in any data center.

CuriouslyC2• 7 months ago

The easiest play is for the people to own the infrastructure AI runs on, then pay for social benefits out of infrastructure rental agreements. The cloud is massively profitable, and the federal government has a real competitive advantage compared to private parties in terms of large buildouts.

welferkj• 7 months ago

Even easier if they just own the AI companies in the first place. Make them go public, and, if you're feeling especially redistributive, spend $X of public funds to purchase stock spread equally amongst americans/humans/sentient creatures.

wmf• 7 months ago

the federal government has a real competitive advantage compared to private parties in terms of large buildouts.

Absolutely not. WWII is over.

CuriouslyC2• 7 months ago

It was over when we built the interstate highway system too.

flunhat• 7 months ago

I don't get it. How does the initial anecdote about AI being shitty and sloppy tie in to the rest of the article?

if we increasingly describe workers as merely being “human-in-the-loop,” what is the human actually there for?

Your anecdote just answered this! Because the LLM slop output in excel wasn't good enough!

acessoproibido• 7 months ago

It does not make sense at all - we just react very well to AI outrage slop on HN (and other platforms) which is why these articles get written so much. You just need some half-baked idea and boom! frontpage

arm32• 7 months ago

Because it wasn't good enough—and for paying taxes!

heliumtera• 7 months ago

What a diarrhea take, my god. How can someone just assume finance is NOT a zero sum game? Will AI wear adidas and rent houses? Everybody lives of the sweat of somebody else. This should be true even in California

potatototoo99• 7 months ago

The future will unironically be communism, and that's the best of possible worlds.

general14652• 7 months ago

I absolutely agree. If AI takes over, most of the jobs are gone. If jobs are gone, income for consumers is gone. If income for consumers is gone, companies will disappear next because customers don't have money to buy goods and in final stage states will go bankrupt because it has no income from taxes because consumers and companies are gone.

Unless... there will be nationalization of AI companies or their massive taxation.

whalesalad• 7 months ago

Reality: Tractors magnified physical labor; they didn’t simulate the mind. More importantly, the industrial revolution took decades. The AI displacement is happening in quarters.

Tractors are a tool - a force multiplier in getting work done - just like AI-based tooling is.

Self-checkout is taking away jobs from checkout clerks. Should we forbid self-checkout in order to maintain job security? It's the same argument.

Rewind the clock to the late 1800s and this same post could have been written about cars taking away jobs from horses.

ahepp• 7 months ago

see a lot of horses around lately?

kmoser• 7 months ago

Reality: It’s not fear; it’s math. If 30% of the workforce is displaced, and the remaining 70% have to pay for the social safety net (or UBI) required to keep the displaced alive, the math breaks.

What evidence does the author have that 30% of the workforce will be displaced (not to mention unable to find another job)? The author also doesn't seem to take into account that AI is also making new jobs: https://www.economist.com/business/2025/12/14/job-apocalypse...

downrightmike• 7 months ago

In 1983, the tax base was 90%, today 80%. To lose 30% of 80% is only a 24% decrease. at 80%, SS is insolvent in 2053, at 56%? certainly insolvent sooner, but all we need to do is increase the taxable maximum and the Rich will be brought into the tax paying population again. Solving the problem.

Do these companies seriously not see a MASSIVE AI tax coming? Gov't wants its money, doesn't matter if its clean or not, as long as it gets its cut.

HNisCIS3• 7 months ago

We are once again wildly overstating the capabilities of LLMs. They'll cause some minor economic rearrangement in the next ten years but slightly better search isn't going to cause mass unemployment any time soon. This is just propaganda from the "AI" industry to further the perception that they've created a machine god. Wake me up when ClosedAI goes bankrupt.

fullstackwife2• 7 months ago

Since when "AI" exclusively implies LLMs only?

HNisCIS3• 7 months ago

What do you think it implies?

Saline95155• 7 months ago

Payroll taxes are inefficient as they discourage work and increase its cost for employers, leading to lower hiring. If payroll taxes vanishes because of AI, it doesn't mean that we should stop using it to increase productivity, but rather reorient taxes.

For instance, land value tax or consumption taxes are often seen as more efficient and fair, depending on their implementation. They also are AI-proof.

snuxoll2• 7 months ago

The problem with consumption taxes, as we have seen time and time again, is they disproportionately affect those with lower incomes.

gjsman-1000• 7 months ago

Do people with lower incomes have the entitlement to all benefits of the state without paying a fair share of their own?

If anything, there’s plenty of literature showing that social programs and tax exemptions on the poor make underpaying them possible to begin with. Walmart couldn’t pay $12/hr. if tax exemptions and SNAP and other aid didn’t fill the gap.

nightski• 7 months ago

Yes but ideas exist like FairTax which directly address this issue in some fashion. It's easy to come up with reasons why something won't work, it is a lot harder to find solutions.

Saline95155• 7 months ago

You can alleviate this by taxing less goods mainly consumed by lower income workers, and handling out social welfare.

QuiDortDine2• 7 months ago

Sales taxes are regressive and nonsensical, why punish people because they contribute to the economy by buying stuff? Just do income tax.

nothrabannosir• 7 months ago

I don't disagree with the first part, but income tax falls into the exact same logic of "why punish people because they contribute to the economy by [working]?"

Saline95155• 7 months ago

You don't contribute by buying stuff but by producing it. And the regressive effect can be reduced by having different rates depending on the type of product.

bawolff• 7 months ago

How are sales tax AI proof? AI doesn't tend to buy stuff.

Saline95155• 7 months ago

AI is used to make products. Those products have to be sold. The revenue from the sales is taxed. Unless you live in a post-money society, as long as there is a monetary exchange you can tax consumption.

BloondAndDoom• 7 months ago

Payroll taxes are the worst for small companies followed by strong labor law. Strong Labor laws are good if the company has 500-1000+ people but not able to fire someone within the month with reason is just dumb (I’m looking at Europe). It indeed causes many startups to hire 50% less people than they can.

I honestly don’t understand taxing anyone making less than something like 500K.

Don’t tax anyone earns less than this, focus all tax collection to top 1% and all big corps that makes more than 5M a year. With all those resource if this can be collected and obvious loopholes patched that’s it.

This would not only bring more tax, but also would fuel massive growth on the bottom line in terms startups and tons of innovation on the medium sized companies.

Jcampuzano22• 7 months ago

Not taxing anyone under 500k would remove a very large share of tax revenue. Combining that with higher corporate taxes would be nice, but if it got pushed too high (which it would in this scenario) we would simply see corporate flight from the US to elsewhere or it would eliminate practically all the benefit of lower taxes from the less wealthy as the cost of goods would skyrocket.

There isn't really a silver bullet unless people in the US as a whole culturally become less consumerist and our entire economy is restructured around that fact.

andsoitis2• 7 months ago

I honestly don’t understand taxing anyone making less than something like 500K. Don’t tax anyone earns less than this, focus all tax collection to top 1%

Top 1% currently contribute 40-42% of taxes.

Top 10% contribute 72-75%.

The bottom 50% contribute only 2-3%.

cperciva• 7 months ago

focus all tax collection to top 1%

If you do that in the USA, you're ignoring 79% of income. The top 1% earn a lot more than average but they're still small in number, and their collective income is only 21% of the total.

(And the USA is uncommonly high as regards income share received by the top 1%; Canada is at 11.5% and is fairly typical.)

AnthonyMouse8• 7 months ago

focus all tax collection to top 1%

Most of the "we should just get all the taxes from rich people" arguments ignore two fairly important things.

The first is how asset markets works, i.e. why rich people are rich. It's because there are finitely many assets and whenever anyone rich gets more money, they use it to bid up the prices. But that makes high taxes on rich people do something unintuitive at scale: It takes away the money that was making the stock market go up. And then not only do they have less money, they also have less income, because the people who would have paid them for their stock also have less money, which makes stock prices go down. Which means that increasing their tax rate from e.g. 25% to 50% doesn't generate anywhere close to twice as much revenue, and it also lowers the growth rate in the tax revenue you get from them. Which means that raising the rate will, in the long term, inherently generate less revenue. Whether you end up underwater in 48 months or 48 years depends on what the existing and proposed rates are and what the economy looks like, but there is always some period of time after which a reduction in the compounding rate is going to absorb any percentage increase in the tax rate. At which point you're paying the recurring costs and lower compounding rate from the higher tax rate indefinitely in exchange for no additional revenue, and indeed for less government revenue.

And the second is that Congress wants money to spend, so they're going to do the things that cause them to have more money to spend. Now imagine what kind of non-tax policies they're going to implement if the tax system makes it so the only way they get more money to spend is if they transfer wealth from the poor to the rich. We don't actually have an effective solution to the principal-agent problem, so perverse incentives are bad, right?

roadbuster• 7 months ago

Payroll taxes are inefficient

I agree, but governments intentionally shifted from corporate taxes (taxes on net, corporate income) to payroll taxes (taxes proportional to employee wages) because businesses were either finding creatives ways of deferring/diverting income, or they just weren't taking profit (and, thus, nothing to tax).

See the third graph here (yellow line vs. dark blue line) https://taxpolicycenter.org/briefing-book/what-are-sources-r...

Saline95155• 7 months ago

Corporate taxes are inefficient as well as they discourage reinvestment by the company, since the State taxes a rake each year. Taxing on dividends paid (and buybacks) is better, even if it leads to higher prices to compensate for the lower capital profitability for shareholders (who compete with bonds).

wyldfire2• 7 months ago

Taxation is a response to the economy. So if the economy changes, so should taxation.

Also - if corporations succeed in becoming completely independent of labor, it will happen regardless of taxation. We shouldn't say to corporations "you must hire people or else we won't have a tax base". We should say to corporations "since you no longer require humans, we will change the way taxes are applied."

A century or more ago, they could see how rapidly productivity was increasing. It's only increasing yet faster now. Economists then predicted people would have enormous leisure time. While they have significantly more, it's not like we have abandoned work. Instead those productivity benefits go increasingly to shareholders and not labor.

So we will soon face a precipice that will disrupt the status quo. And the people will eventually triumph because collectively we are the governed.

nradov2• 7 months ago

Corporations already pay income tax, as do the investors in those corporations. Ultimately someone gets the cash from corporate dividends and stock buy-backs. Just because productivity increases (i.e. corporations are able to generate higher profit with fewer employees) doesn't imply any need to change taxation.

wyldfire2• 7 months ago

Corporations already pay income tax, as do the investors in those corporations.

Of course!

Just because productivity increases

Yeah I guess I'm taking a leap here where robots replace human manual labor and artificial intelligence replaces intellectual labor and there's no role for human labor anymore.

What's the just thing to do in this case? In my opinion, it's not "well we should really be committed to the existing rules because it's worked out well so far." If humans exit the workforce, the way governments work should change to answer such a significant change.

paxys2• 7 months ago

The article and the entire "AI will take all our jobs" doomer moment is idiotic. No one is losing their job to AI and no one will lose their job to AI in the long term without better jobs opening up in their place, same as every single technological innovation in history.

But humoring the author for a moment, and taking their argument to the extreme - let's say AI does take the majority of jobs, and taxes on human productivity aren't enough to sustain society anymore - so what? Isn't not having to work a good thing?

"But how will we pay for things without income taxes??" Why not the same way we did so for literally thousands of years of human history before this kind of taxation was a thing? Or the same way dozens of countries with no income tax do today? Consumption taxes, property taxes, wealth taxes, more efficient extraction and use of natural resources, trade, technological innovations.

The point is, there are plenty of ways for a society to collect revenue, reallocate wealth and balance the books. We don't have to all commit to back breaking labor for ~100% of our functional life just because this is the system most of us were born into and we don't know any better.

kridsdale1• 7 months ago

My wife quite literally lost her job (extremely high annual review scores for ten years) explicitly due to AI.

A reorg happened and the new people said they were closing her whole department because they think Copilot can do it.

paxys2• 7 months ago

Layoffs are a symptom of our shit economy and rising interest rates. Companies have been doing constant rounds of layoffs since at least 2021. The only thing that has changed in the last ~year is that leadership includes "replaced with AI" in the layoff announcement so investors reward them for their "innovation" rather than penalize them for overhiring and missing targets, and employees direct blame to some faceless machine rather than actual people who screwed them over. The work is still being passed on to existing employees like always, and the $20/mo Copilot subscription they get is being immediately ignored.

joquarky4• 7 months ago

I go to various meetups and frequently meet people who have had their jobs taken by AI. Paxys is living in a privileged bubble.

Journalism and transcription/translation jobs have been hit especially hard.

Alchemista• 7 months ago

So you are really going with the unreasonably optimistic take that wealth will actually be redistributed to those that don't have it? Take a look at the slums in India and other periods of history where the lower classes lived in squalor and let me know how confident you are.

That said, I do not think gen AI in its current incarnation is actually going to destroy everyone's jobs.

its_ethan• 7 months ago

In those thousands of years of history, did we ever have multiple cities with populations over 10 million people? Did we have electricity demands? Were the agriculture/ food expectations the same?

Are you really trying to make the argument that if a significant chunk of the population is forced into unemployment, that's fine we'll just tax all the stuff that automated jobs away and it'll all just work out? Panic sets in if unemployment hits like 10% because of all the negative consequences it has on societal outcomes. Just assuming the government is gonna magically be able to reallocate resources it gets from taxing the automated systems that replace human work is a pretty insane thing to expect to work imo.

There are a hell of a lot of assumptions baked into your thinking that need to be explained and probably put under more scrutiny.

Take "We don't have to all commit to back breaking labor for ~100% of our functional life just because this is the system most of us were born into and we don't know any better" for example.

No we don't need to do manual labor 24/7, but what people generally do need is a purpose. Purpose here meaning something akin to meeting an expectation that they contribute to their own survival and to the benefit of society, even if abstractly. Take a look at most NEETs and I don't think you're going to find healthy thriving individuals, I think you're going to find people who are resigned to life and checked out. We didn't evolve to sit on our hands.

Aerolfos• 7 months ago

Apart from being all AI-written:

Reality: It’s not fear; it’s math. If 30% of the workforce is displaced, and the remaining 70% have to pay for the social safety net (or UBI) required to keep the displaced alive, the math breaks.

The argument being given simply avoids the question of where the economy itself is in all this. The workers pay taxes, the taxes pay for infrastructure, sure. But the workers aren't doing work (it got taken), so they aren't earning money, so what do they pay taxes on?

It's all just efficiency gains and everyone currently employed stays employed? Not a single AI company wants that. Not a single tech company wants that. Not only do they want layoffs, they're already happening. So that's not going to work out.

Which means there's less workers being paid, less taxes, less money to be spent on the economy, which means less money to pay workers, which means... the logical conclusion is "no economy at all". Taxes are the last thing to worry about then.

tick_tock_tick• 7 months ago

It's all just efficiency gains and everyone currently employed stays employed? Not a single AI company wants that. Not a single tech company wants that. Not only do they want layoffs, they're already happening. So that's not going to work out.

Every single AI company and tech company would be 100% ok with just efficiency gains. They want to make money and proving efficiency is more then enough for that.

nradov2• 7 months ago

It's always hilarious to see lazy, innumerate people claiming that "it’s math" when in reality they just made up numbers and didn't do any calculations.

satvikpendem2• 7 months ago

You're assuming it's even a person when the author admitted they used an LLM for writing this article.

zrn900• 7 months ago

the logical conclusion is "no economy at all"

Marx called it 150 years ago. Its happening precisely how it said it would.

mystraline• 7 months ago

Exactly. A lot of people think he only wrote about Communism. And he also wrote how capitalism has failed since John Smith first wrote of it.

Is pure communism the right answer? Of course not. But mixing elements would avoid the worst of capitalism and communism.

pton_xd• 7 months ago

Apart from being all AI-written

I think nearly 100% of blog posts are run through an LLM now. The author was lazy and went with the default LLM "tone" and so the typical LLM grammar usage and turns of phrase are too readily apparent.

It's really disheartening as I read blogs to get a perspective on what another human thinks and how their thought process works. If I wanted to chat with a LLM, I can open a new tab.

satvikpendem2• 7 months ago

You might be interested in this: https://news.ycombinator.com/item?id=45722069

satisfice2• 7 months ago

I never use an LLM for blog posts. Seemed like you need to hear more people telling you that.

Only amateurs and scammers use LLMs for writing.

AnthonyMouse8• 7 months ago

Which means there's less workers being paid, less taxes, less money to be spent on the economy, which means less money to pay workers, which means... the logical conclusion is "no economy at all".

Except that's not how the economy works.

Suppose you automate web development. Fewer people get paid for that anymore. Does it increase long-term unemployment? Not really, because it creates surplus. Now everybody else has a little extra money they didn't have to spend on web development, and they'll want to buy something with it, so you get new jobs making whatever it is they want to spend the money on instead.

The only way this actually breaks down is if people stop having anything more they want to buy. But that a) seems pretty unlikely and b) implies that we've now fully automated the production of necessities, because otherwise there would be jobs providing healthcare, growing food, building houses, etc.

tomrod• 7 months ago

Your implicit assumption with the web dev is that this scales. Unfortunately, that may not be the case.

cal_dent• 7 months ago

But that implicitly assumes all jobs are comparable financially. Sure there’ll always be jobs to do but x number of web devs or whatever is not the same as x numbers of nursing home care workers.

Also in terms of extra money and spending, the logic also breaks a bit because we know that by age cohorts, older cohorts have more money but tend to have less consumer spending than the 25 - 40 cohort.

alecco• 7 months ago

Now everybody else has a little extra money

The flaw is assuming that lower costs “free up” money.

Money isn’t "freed". Money is created. Banks create it when they lend against future income. If automation removes wage income, banks don’t create replacement demand: they redirect credit into assets.

That’s why you can have rising productivity, stagnant wages, booming asset prices, and weak consumption at the same time. The missing variable is where credit is created, not how efficient production is. (Think Japan in the 90s)

If you think the AI threat is real buy real assets now. (not financial IOUs in computer systems)

"How Do Banks Create Money?" https://www.youtube.com/watch?v=3N7oD5zrBnc

Jordan-117• 7 months ago

Now everybody else has a little extra money they didn't have to spend on web development, and they'll want to buy something with it, so you get new jobs making whatever it is they want to spend the money on instead.

Why assume a business that just boosted profits by reducing headcount would want to spend that surplus on hiring more workers elsewhere? Seems like it would mostly go towards stock buybacks and higher executive pay packages. There might be some leakage into new hiring, but I reckon the overall impact will be intensifying the funneling of money to the top and further hollowing out of the labor market.

_DeadFred_3• 7 months ago

Billionaires (that REALIZE gains on their investments via loans based on the investments' current value and not the original value)and AI Companies are about representation without taxation, while those that are taxed get their voice drowned out by those same actors.

seanmcdirmid• 7 months ago

It's all just efficiency gains and everyone currently employed stays employed? Not a single AI company wants that.

I disagree with your assertion. Efficiency, production improvements are exactly what many companies are going for. We already have a huge deficit of software that needs to be written that cannot be written with the current Human programming resources available. We have plenty of things, infrastructure and otherwise, that don’t get built because of a lack of human labor to do them. We haven’t colonized the solar system yet due to a lack of resources, etc…

It’s really pessimistic to think that all this tech is going to go to maintaining the current status quo with just much less labor.

jaybrendansmith• 7 months ago

100% this. I run a software company and we never run out of new things to build. Our issue is velocity, we would be foolish to lay off employees, rather we must use AI to build things 50% faster if we can. What AI will do is further level the playing field in software, just like tractors allowed farms to expand in size.

palmotea• 7 months ago

Which means there's less workers being paid, less taxes, less money to be spent on the economy, which means less money to pay workers, which means... the logical conclusion is "no economy at all". Taxes are the last thing to worry about then.

Assuming the hype pans out and we get AGI, the end result won't be "no economy at all," it'll be a really weird one that does nothing to satisfy the common man's needs (because they will be of no economic use to the owners of the technology).

All the world's resources will be harness to satisfy the whims of a very few trillionaires, and there will be no place for you (except perhaps as a cultish sycophant, if you're lucky)

peteforde• 7 months ago

Cynicism about corporate accountability, regulation, oversight and legal consequences is a much larger concern than LLMs displacing people from what David Graeber would have called shitty jobs.

When I read a post that presumes that corporations are above the law and that it's a closed issue, I get sad. We can have nice things, but we must stop supporting governments that aggressively deregulate, prioritize mergers over public good, and compel their law enforcement to focus on hunting migrants instead of forcing corporations to pay taxes.

Talking about these systemic issues as though they are unsolvable because clearly corporations gonna corporation is maddening.

I don't understand why they don't jail corporate directors who are ultimately responsible for approving creative accounting tricks. If there's no penalty, of course they aren't going to do the right thing.

The greatest trick the devil can play in this era is convincing the public that their enemy is the least powerful people in society, not the most powerful.

dleslie• 7 months ago

At this point I think it's incumbent on those who defend the American system to provide evidence that their justice system is not pliable with wealth, that it is a meaningful threat to business and not simply an acceptable accounting risk.

How much do pardons go for these days? One to six million?

As Carney put it, the first and most important difference between the USA and Canada is that Canada enjoys the rule of law.

A4ET8a8uTh0_v2• 7 months ago

<< A person was venting to a friend about being forced to use AI

I am not sure I understand the opinion piece listed, but it does have one fragment that I can confirm as happening and it is that the use is effectively being mandated. Take it as you will, but my company rolled out next year's goals. Can you take a guess as to what they contain and what people will do to accomplish those goals. Hang in tight. It is going to be a bumpy ride. And here is a thing, I actually like this tech.

dizlexic• 7 months ago

As someone who was blown away when I started my own online business and underestimated what I would be responsible for with taxes I could go full libertarian and yell "TAXATION IS THEFT" from the rafters, but I'll refrain.

It was still a shock though. I thought our system / goal was to encourage individuals to pursue their dreams and be self-sufficient. If that is actually the case, then our system is broken.

Skipping the details I made enough to support myself and my wife. The government wanted around 20%-25% of that, and they do NOT like to take "I can't afford that" as an answer. Fast forward to today and with poor accounting and lack of foresight I now am working a fulltime corporate soul sucking dev job to pay back the government for the years I tried to make it work on my own.

It's the most disillusioned I've ever been with my life. I've never felt as trapped and depressed as I do right now. All because I owe the IRS a large amount of money. On the plus side we have some amazing bombers/jet fighters, and someone is getting their healthcare subsidized.

didgetmaster• 7 months ago

What if AI can greatly reduce the amount of money (i.e. tax receipts) that the government needs to function properly? What if AI can quickly determine who really qualifies for government assistance, and cuts off all the fraudsters without needing an army of bureaucrats?

We could even cut out a ton of middle-men and return congress to a part-time job. One can only dream, right?

bigfatkitten• 7 months ago

What if AI can quickly determine who really qualifies for government assistance, and cuts off all the fraudsters without needing an army of bureaucrats?

Australia tried that, and it did not go well.

https://en.wikipedia.org/wiki/Robodebt_scheme

UncleMeat• 7 months ago

Eliminating all fraud for government assistance would not meaningfully change the overall budget.

Also, basically all efforts claiming to tackle fraud in government assistance are actually efforts to deny people assistance who do qualify for it.

jleyank• 7 months ago

In a consumer economy, people have to have the free cash to consume. Today, we call them workers. If they’re displaced, there’s going to be a hell of a lot of corporate taxes or trashed machines. I’d bet on the latter.

general14652• 7 months ago

You are being downvoted by people who don't realize how money works. Without consumption, companies will cease to exist (rent, loans, energy). Without companies and consumption, taxes are gone and states are going bankrupt because it has still things like pensions, army or police to pay. And ultimately with whole consumption chain gone, those AGI valuation in Trillion of USD is zero, because nobody has money to afford to rent one.

toss14• 7 months ago

The solution is to stop taxing human labor/income and to start taxing every financial transaction, from buying a piece of candy, a computer component, a service, a house, a data center, or a share of stock, etc.

Just the volume of Equities + TRACE fixed income/structured + munis + real estate is over $200Trillion. A mere 3% tax on those would put the $6T US budget in large surplus. Add $1.7 Quadrillion of ovrerall payments and a 0.3% tax on transactions (yes, $3 per $1000) would also put the US budget in surplus.

All of it would also involve far less tracking and bureaucratic overhead, and indeed far less govt intrusion into people's lives (i.e., not digging into every source and amount of income).

Yodel09142• 7 months ago

I in principle agree, but it’s very hard to implement a progressive tax system if the basis is consumption (or “financial transactions”)

toss14• 7 months ago

How not; wouldn't it be straightforward to have tax rate tables based on transaction size? E.g., transaction <$10=0, <$100=0.1%, <$10k=0.2%, <$100k=0.3%, <$1MM=0.4%, =>$1MM=0.5%, with restructuring payments to avoid taxes to carry heavy penalties.

Not many poor people will be making million-dollar+ transactions, and it seems like taxing ALL transactions will help make the rich pay their fair share, as their money tends to have low velocity relative to consumer goods, but they still do a lot of transactions.

EDIT: Also it should have zero taxes on necessities such as food & non-luxury clothing, similarly to how current state/local sales taxes work.

Also, if there is sufficient tax rate and income to do UBI to above poverty level, wouldn't the need for a progressive tax structure become obsolete?

joquarky4• 7 months ago

Also gains on sales of things like stocks and commodities should be taxed proportionally to how briefly they are owned, with an asymptote approaching 100% for HFT.

And no basis reset upon inheritance.

toss14• 7 months ago

YES!! I've long thought the tax rates on cap gains should be extremely progressive with holding time, ranging from 99%+ for sub-second holding (HFT) to sub 5% for decade+ holding periods. This would also effectively eliminate the utility of basis reset on inheritance, since the rate for multi-decade holding goes so low.

Also a great idea I saw recently is to treat any encumbrance of a capital asset as a realization event. For example, early investors in a company holding stock may have $millions in unrealized gains. Those gains are 'realized' and taxed on sale of the stock. However, if they take a loan using the stock as collateral, it is not taxed because there is a matching obligation to repay the loan and the stock ownership doesn't change (except in a default). Such loans should be taxed as a realization event, since they are pledging the stock at its current value, not its comparatively microscopic original purchase value.

kelseyfrog• 7 months ago

It's only a matter of time until the zero-employee unicorn becomes technically possible.

The path there looks like Uber's early playbook:

* Run the company as if AI outputs are attributable corporate acts with liability clearly sitting at the corporate entity level.

* Scale faster than attribution doctrine can be practically enforced.

* Cross the "too big to fail" line. ie: become economically and operationally indispensable.

* Force doctrinal clarification, where courts recognize AI-mediated decision systems as a basis for corporate attribution, without inventing new legal persons.

fuzztester• 7 months ago

Don't worry, all. They (the madmen, er, badmen) will come up with an AI-currency (like crypto) that AIs can "pay" to the govt. as taxes, and all will be hunky-dory - for them and their masters, that is.

For the rest of us - well, life is finite, anyway. So might as well make it finito.

;)

jillesvangurp• 7 months ago

AI employees are not employees. They are tools, not people.

The fallacy here is applying a closed world assumption where the amount of code doesn't change but more of it is written by AIs and sold for the same dollar amount. And therefore less taxes get paid. That assumption is wrong; and so are the conclusions and sand castles built on it.

The reality is that whenever we give programmers better tools, we get more programmers, not less. And then they start creating even more software than before. Also the value of software drops but the amount spent on software grows. That's because economies grow when you drop the cost of something and create more demand for that stuff. In this case software. Where in the past some companies might not have bothered with an app or a website or automation, many now do have some of that stuff. And now they get to raise the ambition level and maybe see if they can automate some more of their internal processes.

Most companies won't do that themselves. They'll pay others to do this for them. And those people and companies will compete with each other on who does the best job most cheaply for a given return on investment. Which is nothing new. The winners will likely be leaning heavily on AI tools to earn handsomely for solutions that deliver some kind of value. They'll want better/smarter apps, deeper integrations with stuff, more automation, a sprinkling of AI, and whatever else makes their companies run better and earn more money.

AI tools themselves are already a commodity and just a means to an end. Anyone can use them. But only some know how to use them well. The skill is in understanding how to use them, what to fix, where to apply them, etc. Those wielding them best will line up more happy customers and revenue. And then they pay their taxes. Over the value they created.

They here being companies that increase their profits, software companies that charge for helping them do that, people employed by those companies, and AI infrastructure and other suppliers that are part of the solution here. Economies grow over time. VAT, profit tax, income tax, etc.

There's a lot of work that will need to happen over the next few decades to pull a lot of this planets industries out of last century. Anyone that believes it's all going to be AIs doing that by themselves more or less unprompted is dreaming. This is going to be a lot of work that will involve a lot of investment for potentially very big returns on investment. A lot of that work wasn't happening because it was too hard or expensive. It just got cheaper, so more of it will start happening now. There's plenty left to do.

tombert• 7 months ago

I agree. It's not like we're ever going to get to a state where we say "oh wow, all potential work is done, there's literally nothing left to do".

Like pretty much every technical innovation in history, when we have access to more tools, we just figure out how to solve bigger problems. People might have felt bad for horse breeders who lots out when planes, trains, and automobiles became ubiquitous, but people adapted around it. Now people can work and travel around the world, and there are industries around all these things. It's generally applied to parallelism, but I think it applies here: https://en.wikipedia.org/wiki/Gustafson%27s_law

While I've had my issues with the "vibe coding" performance right now, ultimately if I can get something to handle the boring and tedious parts of programming, then that frees up time for me to focus on stuff that I find more fun or interesting, or at the very least it frees me up to work on more complicated problems instead of spending half a day writing and deploying yet another "move stuff from one Kafka topic to another Kafka topic" program.

DrSiemer• 7 months ago

So "Corporate profit taxes are a game of hide-and-seek", but "you can tax the value flow, the revenue generated in-country, or the massive energy consumption of the data centers"?

The author acts as if taxes are not a completely fluid system, that will quickly adept to ensure revenue keeps flowing, squeezing wherever the squeezing is the juiciest. It does not need cautious calibration.

maxlybbert• 7 months ago

Economists often talk about substituting capital for labor. It's certainly common in countries, such as the US, where labor is relatively expensive.

I think it's perfectly reasonable to change the tax system to make sure there's no tax advantage to substituting capital for labor, or for that matter, labor for capital. I have no idea what changes would be needed, but there's no reason that using AI should have significant tax implications.

djoldman• 7 months ago

What can we reasonably expect the level of our economic life to be a hundred years hence? ... for the first time since his creation man will be faced with his real, his permanent problem – how to use his freedom from pressing economic cares, how to occupy the leisure ... we shall endeavour ... to make what work there is still to be done to be as widely shared as possible. Three-hour shifts or a fifteen-hour week ....

- John Maynard Keynes, 1930 [0].

Keynes was an economist whose work had an enormous impact and is still discussed and taught today. He predicted much more leisure and much less work for the future and he was wrong.

Extrapolating productivity (hours of work required to create a fixed output) into the future, it makes sense that we'll need to work a lot less to make the same stuff. The missing piece is that we end up deciding we need to make other stuff/services. We fill in our extra time making new things. We're not satisfied with what we used to have.

If AI drastically increases productivity, leading to job losses, we will just make other stuff and provide other services and fill our time with that. People will create other jobs to satisfy that demand. For reference:

1700s: 90% of US workers were farmers. early 1900s: 40%, 1970: 4%

1940s: 38% of US workers were in manufacturing/factories. 2020: ~9%

As productivity improves, we come up with other things to make or services to provide that are higher complexity or "worth more".

The products and services provided by a country are not static.

[0] https://www.marxists.org/reference/subject/economics/keynes/...

OrionNox• 7 months ago

Sounds like a socialist to me

satisfice2• 7 months ago

I stopped reading when this idiot declared that a tool that makes problems worse instead of helping is evidence of a system working as it should.

This is reasoning as cockeyed as the pigs use in Animal Farm.

RickyLahey2• 7 months ago

I'm going to be controversial and ask: who pays taxes in tech?

RickyLahey2• 7 months ago

I'm going to be controversial and ask: who pays taxes in tech like they should be paid? i mean small and big corporations.

laxmena• 7 months ago

Setting aside the tax discussion for a moment:

In the end, the “shortcut” had cost her more time than if she’d just done the work herself from the start.

I had this same opinion on AI IDE Copilots about a year and a half ago. They were too nascent, and writing code manually saved me hours of debugging their buggy code recommendations.

Fast forward - today—IDE Copilots have grown leaps and bounds in its quality of outputs. They have real utility now.

It's important to note that - "This is the worst AI agents will ever be, it will only get better moving forward."

I'm confident these tools will keep improving and eventually create net productivity gains, including for the Excel use case you mentioned.

Jsemivan• 7 months ago

Thank you for the clarity of the article.

AI employees don't pay taxes

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