Comment by Assaf Harpaz

This Article argues that AI threatens to disrupt the tax system’s ability to fulfill its fundamental goals of raising revenue, redistributing income, and regulating taxpayer behavior. The risk is heightened by the federal government’s dependence on individual labor income, even as economic value shifts toward mobile capital and AI ownership by large firms. The Article proposes two interventions to help address these challenges. In the short term, it recommends increasing the capital gains rates on the sale of ownership interests in AI-intensive firms.