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AI, Automation and Taxation

Author

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  • Bastani, Spencer

    (Uppsala University)

  • Waldenström, Daniel

    (Research Institute of Industrial Economics, Stockholm)

Abstract

This paper examines the implications of Artificial Intelligence (AI) and automation for the taxation of labor and capital in advanced economies. It synthesizes empirical evidence on worker displacement, productivity, and income inequality, as well as theoretical frameworks for optimal taxation. Implications for tax policy are discussed, focusing on the level of capital taxes and the progressivity of labor taxes. While there may be a need to adjust the level of capital taxes and the structure of labor income taxation, there are potential drawbacks of overly progressive taxation and universal basic income schemes that could undermine work incentives, economic growth, and long-term household welfare. Some of the challenges posed by AI and automation may also be better addressed through regulatory measures rather than tax policy.

Suggested Citation

  • Bastani, Spencer & Waldenström, Daniel, 2024. "AI, Automation and Taxation," IZA Policy Papers 212, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izapps:pp212
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    Cited by:

    1. Minniti, Antonio & Prettner, Klaus & Venturini, Francesco, 2024. "Unslicing the pie: AI innovation and the labor share in European regions," Department of Economics Working Paper Series 369, WU Vienna University of Economics and Business.

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    More about this item

    Keywords

    tax progressivity; optimal taxation; labor share; inequality; automation; AI;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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