AI Economy Tax Model
What tax rate on AI companies maintains living standards as automation displaces workers? Adjust inputs to explore scenarios.
Displacement
White Collar96M workers
30%Blue Collar64M workers
15%Avg. Income Lossper displaced worker
100%100% = fully displaced (no remaining income). Lower values model partial automation — e.g., 60% means workers lose 60% of income on average, retaining some hours and paying some taxes.
Benefit per Workerscales with income loss
$40,000AI Economy
AI Company Revenue
$2.0TLink Revenue to Displacement
When enabled, AI revenue auto-scales with displacement level
Value Capture Ratioshare of total AI economic value that shows up as AI company revenue
25%AI creates value beyond what AI companies bill for — productivity gains, consumer surplus, etc. At 25%, if AI companies earn $2.00T in revenue, total AI-generated economic value is $8.00T.
Offsets
Benefit Tax Rateeffective tax on displacement benefit income
15%Displacement benefits are taxable income. At 15%, $230.4B flows back to the treasury.
Fiscal Recaptureindirect tax revenue from benefit spending
15%Benefit recipients spend most of their income, generating sales tax, business income tax, and other indirect revenue. At 15%, $195.8B is recaptured.
Deficit
Deficit Coverageof $1.8T deficit
0%Equity Fund
Include Equity Fund
Tax on AI company equity (paid in shares) generates dividends that offset costs
Scenario Summary
Displaced Workers
38.4M
Total AI Value
$8.00T
Lost Tax Revenue
$600.0B
Gross Benefit Cost
$1.54T
Tax Recovery
$230.4B
Spending Recapture
$195.8B
Required Tax Rates on AI Company Revenue
Layer 1 — Displacement Benefit Only
55%$1.11T needed
Layer 2 — Benefit + Lost Tax Revenue
85%$1.71T needed
Layer 3 — Benefit + Lost Tax + Deficit Coverage
85%$1.71T needed
Layer 4 — Rate on All AI-Generated Value
21%$1.71T needed
⚠ Sanity Checks
Rate of 85% on AI revenue likely exceeds profit margins, making it economically unviable on revenue alone.