A wave of public anxiety over artificial intelligence (AI) and economic instability has prompted a flurry of competing legislative proposals from Washington, D.C., and Silicon Valley, as policymakers scramble to find ways to buffer American workers against potential AI-driven job losses.
The growing unrest has pushed both progressive lawmakers and tech titans to float radical overhauls to the U.S. tax and economic systems.
In a recent Time op-ed, Sen. Elizabeth Warren, D-Mass., called for direct taxes on AI companies — targeting infrastructure like data centers — alongside corporate and wealth tax updates. Warren argued that the revenue is vital to fund universal healthcare, free education, and a federal jobs guarantee.
“If millions of people lose their jobs to AI, we’ll need the funds to deliver universal healthcare, so those workers are not bankrupted by a visit to the doctor,” Warren wrote.
Other progressive lawmakers are echoing her urgency with targeted tax models.
Rep. Greg Casar, D-Texas, chair of the Congressional Progressive Caucus, proposed taxing tokens. Casar argues this directly pairs the tax revenue to AI utilization, allowing revenue to scale alongside automation to fund federal employment programs.
Sen. Bernie Sanders, I-Vt., announced plans for legislation that would claim a 50% equity stake in leading AI firms, effectively acting as a one-time tax. Sanders said that because AI is built on “the collective knowledge of humanity,” its financial rewards should benefit the public rather than a few industry moguls.
“Taxing AI infrastructure directly puts policy at the compute layer, where data centers become the leverage point. Building and running AI systems would carry regulatory exposure on top of the energy, hardware, and capital pressures already compressing margins,” said Mitch Ashley, vice president and practice lead for Software Lifecycle Engineering and AI-Native Software Engineering at The Futurum Group. “Builders respond to where cost lands. A tax on the infrastructure layer turns compute efficiency and workload placement into exposure-management decisions. Inference economics shift from engineering optimization to board-level constraint, and firms already running lean gain room the rest do not have.”
Industry observers like Esteban Kolsky of Constellation Research scoff at the notion of a federal government “not understanding the basic tech behind all this by doing stupid things like this (taxes).”
“Before we redesign the tax code around AI displacement, we need more discipline around where AI is actually being deployed, what work it is changing, what costs it is creating, and who is accountable for the outcomes,” said Steph Solyon, CxO at Ghostwriter. “The companies that handle this well will not just ‘replace labor with AI.’ They will redesign work, retrain teams, govern execution, and create measurable business value without breaking trust.”
Still, the concept of universal basic capital, which gives citizens a direct financial dividend from automated industries, is gaining unexpected traction within the tech sector.
OpenAI recently recommended creating a public wealth fund seeded by the government and AI firms. The ChatGPT maker also signaled support for higher capital gains taxes and exploring measures specifically tied to automated labor. Meanwhile, California Gov. Gavin Newsom signed an executive order to evaluate workforce training alongside universal basic capital concepts to cushion potential labor disruptions.
Other tech leaders, including Elon Musk, have doubled down on universal basic income (UBI) as a necessity if AI renders traditional work optional.
Despite high-profile warnings such as Anthropic CEO Dario Amodei’s prediction that AI could eliminate half of entry-level white-collar jobs, hard evidence of a mass “jobs apocalypse” remains limited. OpenAI CEO Sam Altman recently softened his own bleak forecasts, admitting he was “delighted to be wrong” about immediate large-scale displacement.
With U.S. consumer sentiment hitting a record low in May amid global economic strain, a recent Economist/YouGov poll reveals that 41% of Americans believe AI will negatively impact the economy, compared to just 17% who view it positively.
Economic experts urge caution before rushing into sweeping tax legislation. Tahra Hoops, director of economic analysis at the Chamber of Progress, noted that current proposals feel like “throwing something at the wall to see what sticks.” Hoops emphasized the need for data-driven policy, pointing to a bipartisan bill from Sens. Mark Warner, D-Va., and Josh Hawley, R-Mo., that would legally require major corporations to report AI-related layoffs to the Department of Labor.
“The anxiety is real, but the policy reflex is aimed at the wrong target. Washington is debating how to tax and redistribute around AI before anyone has defined what work it changes,” said George Gerchow, chief security officer at Bedrock Data. “The real risk is not that AI takes the jobs; it is that we stop building the on-ramps that let people grow into the jobs it creates. If lawmakers want to buffer workers, the durable move is to fund reskilling and apprenticeships that turn displacement into mobility, not a new tax scheme. We don’t need to slow the technology down; we need to speed the people up.”
