Macroeconomic impacts of AI
require companies to pay a tax when they automate jobs or use machines instead of human workers. The rationale being to recover lost labour-based tax revenue, address growing income inequality, by capturing automation's gains and encourage more responsible innovation. This could take various forms, such as a direct tax per automated system or a payroll-equivalent tax. This tax could equate the cost between machines and human labour, encouraging companies to automate only when it truly adds value beyond simply cutting labour. 19 The revenue generated could be used to fund social safety nets and retraining programmes. However, the implementation of such a tax could present several challenges; including defining what constitutes a ‘robot’ or ‘AI’ for tax purposes and establishing international agreements to prevent companies from relocating to tax-friendly jurisdictions. 20 In addition to these fiscal policies, a more fundamental approach to managing the transition is to focus on upskilling and reskilling the workforce. The World Economic Forum emphasizes that a key strategy for this and previous industrial revolutions is to ‘retrain and reskill and transform the workforce’. 21 New roles such as AI Ethicist, AI Trust Analyst and AI Output Verifier will be needed to ensure the machine’s outputs meet the required standards. Reducing structural unemployment in the long term and ensuring the work force is kept busy during the interim training period. Conclusion Artificial intelligence presents both profound challenge and opportunity, shaping an economic landscape defined by both disruption and extensive growth. While the short-term anxieties of job displacement and inequality are real, they are the growing pains of a new industrial age. History demonstrates that technological shifts such as the industrial Revolution and the dot-com boom, ultimately lead to greater prosperity and new forms of employment. With proactive policy interventions and the responsible application of AI to address societal challenges we can harness its power for the greater good. As humans we have always embraced progress and adapted to change, leveraging AI is no different and marks another technological leap for mankind. Other reading Agrawal, A., Gans, J. & Goldfarb, A. (2018) Prediction Machines: The Simple Economics of Artificial Intelligence. Cambridge, Ma Artificial Intelligence, Automation and Work | NBER https://www.nber.org/papers/w24196 Exploring the Effects of Generative AI on Inequality | MIT Sloan, https://mitsloan.mit.edu/centers- initiatives/institute-work-and-employment-research/exploring-effects-generative-ai-inequality Homepage of Anton Korinek, https://www.korinek.com/ How Will AI Fundamentally Transform Our Economy? – Darden https://news.darden.virginia.edu/2025/01/16/how-will-ai-fundamentally-transform-our-economy/ 19 Taxing automation: should companies that use robots pay more to society? | by The Future of Technology Review. https://futureoftechnology.medium.com/taxing-automation-should-companies-that-use-robots-pay-more-to- society-bb944c56f925. 20 Navigating the future of work: A case for a robot tax in the age of AI | Brookings . https://www.brookings.edu/articles/navigating-the-future-of-work-a-case-for-a-robot-tax-in-the-age-of-ai/. 21 Future of Jobs Report 2023 | World Economic Forum. https://www3.weforum.org/docs/WEF_Future_of_Jobs_2023.pdf.
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