AI Tax Coming? Sen. Brian Schatz Reportedly Signals Senate Push Amid Labor Market Fears

• One of Schatz’s draft bills would levy what his office described as a “progressive non-deductible excise tax” on revenue generated by AI companies.
• The proposal also entails federal support for state and local governments to hire workers whose jobs have been eliminated.
• The second measure would activate “an automatic, whole of government response” if the national unemployment rate surpasses 5.5% for two consecutive quarters. 

Sen. Brian Schatz (D-Hawaii) is reportedly preparing legislation to safeguard workers from potential job losses and economic disruption as artificial intelligence reshapes industries at a rapid pace. 

According to an Axios report, the Hawaii Democrat plans to reveal two separate measures in the months ahead designed to address labor market risks linked to AI adoption.

Proposed AI Revenue Tax

One of Schatz’s draft bills would levy what his office described as a “progressive non-deductible excise tax” on revenue generated by AI companies, the report cited. 

Funds collected under the plan would support a national retraining initiative for displaced workers, offering income support and health coverage during the transition period.

The proposal also includes federal support for state and local governments to hire workers whose jobs have been eliminated, while directing federal agencies to create retraining pathways for government roles.

Response To Rising Unemployment

The second measure would activate “an automatic, whole of government response” if the national unemployment rate surpasses 5.5% for two consecutive quarters. According to the report, Schatz warned that AI’s transformation of workplaces is already underway. 

"AI is already changing how people work, and it's bringing real risks: massive job losses, increased workplace surveillance, and weaker bargaining power for workers. We need to get ahead of it.”

-Sen. Brian Schatz

On Tuesday, Federal Reserve Governor Lisa D. Cook also highlighted how artificial intelligence is reshaping both productivity and the economy. 

“As such, our normal demand-side monetary policy may not be able to ameliorate an AI-caused unemployment spell without also increasing inflationary pressure.”

-Lisa D. Cook, Governor, U.S. Federal Reserve

Additionally, Citrini Research, a firm specializing in thematic equity strategies, cautioned on the rapid expansion of AI in the economy. The research suggested that while AI continues to drive corporate spending and market enthusiasm, its long-term effects may ultimately harm the average American worker.

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