Comment by Organisation for Economic Co-operation and Development (OECD)

Labour income, the main financing source of social protection, is under pressure: population ageing lowers the number of hours worked, while new technologies, in particular AI, may increase capital productivity and lower the labour share of income. [...] Lower relative taxation of capital compared to labour can also directly incentivise the deployment of labour-saving technologies over and above what they would be in the absence of this imbalance. Capital is generally taxed at lower rates than labour in many OECD countries. Reducing this gap – by some combination of lowering non-wage labour costs and raising effective tax rates on capital – could weaken the incentives of firms to invest in automating technologies.