Comment by Elena Patel

If AI does displace workers, supporting them requires unemployment insurance, retraining, and a stronger safety net. But the same shift that displaces workers leaves government less equipped to help, not more. If AI’s gains flow to owners rather than workers, the tax base that fuels the spending needed to support them erodes because capital income is taxed more lightly than wage income. [...] If a narrow tax won’t do it, the better bet is on reforms worth making regardless of how AI unfolds. Strengthen unemployment insurance and retraining for displaced workers. Broaden how capital income is taxed and introduce a value-added tax to shore up the tax base. Replace the corporate income tax with a cash-flow tax on windfall profits.