Taxes

Democrats Want To Tax AI Companies for Job Losses That Haven't Happened

The proposed tax would rise with unemployment and fund a new federal jobs program—even though AI has yet to cause mass unemployment.

Reem Ibrahim | 8.7.2026 4:55 PM

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(Illustration: Midjourney/Nikolai Sorokin /Dreamstime)

Hysteria over the potential consequences of AI has led Democratic lawmakers to propose another tax on the industry.

On Thursday, Rep. Greg Casar (D–Texas) introduced the AI Tax and Work Protection Act, which would impose a federal excise tax on major AI firms to establish and fund a federal jobs program. Casar previewed the idea in a May op-ed for The American Prospect, where he wrote that "an AI tax should target the companies that stand to make billions of dollars by laying people off."

"One goal of this tax should be to shift incentives to save jobs. Our tax system basically gives companies huge tax savings when they automate a job, because we currently tax wages but not AI," he added.  "If you replace a worker with an AI-powered robot, you save on payroll taxes: That's functionally a tax break. That's wrong, and an AI tax would start to change it by leveling the playing field."

The bill would calculate the tax in two........

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