In a groundbreaking move, the White House announced a proposal to overhaul the federal tax system by replacing traditional income tax with a new “AI Productivity Tax.” The plan targets companies utilizing artificial intelligence to automate labor, proposing taxation based on the volume of automated work output rather than employee wages.
Speaking at a press conference, Treasury Secretary Linda Morales said, “As automation reshapes the economy, our tax system must evolve to reflect where value is created. This new tax will ensure that AI-driven productivity contributes fairly to public funding.”
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The proposal aims to capture revenue from tech giants deploying AI technologies and redistribute it to support social programs impacted by job displacement. The plan is expected to face scrutiny in Congress, with debates centered around implementation challenges and potential effects on innovation.
Economists are divided, with some calling it a “necessary modernization,” while others warn it could slow AI adoption in U.S. industries. The administration plans to introduce the bill by the end of the year.
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