The technological race among industry giants and the wave of layoffs they have announced has revived the debate about the advisability of taxing automation
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%.
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