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The writer is international policy director at Stanford University’s Cyber Policy Center and special adviser to the European Commission
After years of wrangling, a global minimum corporate tax rate of 15 per cent is finally in effect. These groundbreaking new rules were driven by the desire to prevent big companies, often in the tech sector, from flocking to tax havens or jurisdiction shopping. There are a host of public policy solutions that the anticipated $220bn in annual collection can help address. But even though the ink on the treaty is barely dry, it is time to start talking about a new one: targeted at artificial intelligence companies.
Generative AI is already bringing a host of societal challenges. Global job losses are one key expected effect. While the political debate remains largely focused on safety and security harms, various studies foresee deep disruptions to labour because of the technology. It was Elon Musk who raised the future of work on the margins of last year’s AI safety summit. He casually mentioned, in a conversation with UK Prime Minister Rishi Sunak, that we must anticipate a society in which “no job is needed”. The reverberations of that are unimaginable.
And it is not just tech mavericks like Musk who predict major disruption. A study by Goldman Sachs projects almost $7tn of additional growth for the global economy over 10 years, while expecting that roughly two-thirds of US jobs will be at risk of being impacted by AI. McKinsey anticipates up to 30 per cent of worked hours in America will be affected by automation in the next six years. Twelve-million people will need “occupational transitions” in addition to those already facing obsolescence.
While consultants are optimistic that AI will “enhance” jobs rather than replace them, research by ResumeBuilder found that more than a third of business leaders said AI had already replaced workers in 2023. There is no indication that the more sophisticated versions of generative AI would lead to a slowdown in impact on employment.
Although scenarios differ, they all signal similar trends. Jobs will be displaced, and even if there may be an economic upside in the longer term, the transition will require significant public policy efforts. Governments need to zoom in on the specifics of their own national economies and anticipate the impact of AI, sector by sector.
On the corporate side, there are also unprecedented shifts taking place. Already, we see AI companies as a major component of the most highly valued corporations in the world. In the US, tech companies helped drive gross domestic product growth in 2023. At the same time, AI threatens to exacerbate the concentration of capital into the hands of even fewer companies.
“Over the past four decades, automation has raised productivity and multiplied corporate profits, but it has not led to shared prosperity in industrial countries,” say Daron Acemoğlu and Simon Johnson in a paper for the IMF. In other words, the benefits of automation are not shared automatically. (More research is needed into the specific effects on jobs across the global south.)
Without intervention, the next chapter of the technological revolution risks once again privatising profits while pushing the costs of mitigating its harms on to the public. Paying for welfare and reskilling laid-off workers are not just economic downsides: they signal the kinds of societal shifts that easily lead to political unrest. For generations, work has been the foundation not just of family income but also of people’s routine and sense of purpose. Try imagining what you would do without your job.
To rebalance the cost-benefit impacts of AI in favour of society — as well as to make sure the necessary response is affordable at all — taxing AI companies is the only logical step. I had not anticipated starting 2024 by agreeing with Bernie Sanders and Bill Gates, both of whom have proposed a tax on job-taking robots in the past, but here we are. An updated version of their plan, taking in generative AI’s progress, is needed.
A debate resulting in global political consensus may take years and should start now. Agreement must be reached around the percentage of revenue or profit to be taxable and the purpose of the tax — should it be focused on mitigating job losses specifically or on addressing the multiple societal impacts of AI more broadly? And given that China and the US are both leading AI developers and have not yet implemented the minimum corporate tax rate rules domestically, incentives and enforcements will have to be effective.
It took years to get a minimum global corporate tax base in place. Considering the impending costs to society, a conversation about a targeted tax for billion-dollar AI companies cannot wait.