Workers’ incentives and the optimal taxation of AI
Abstract
We characterize the optimal tax policy in an economy with human manual and cognitive labor, physical capital, and artificial intelligence (AI). Extending the dynamic taxation setup of Slavík and Yazici (2014), we find that it is optimal to start taxing AI once cognitive workers find themselves at a disadvantage in the labor market relative to manual workers. This threshold may be crossed once AI becomes sufficiently capable in substituting humans across cognitive tasks.
Fields of Study & Subjects
Taxation and Compliance Studies
Digital Economy and Work Transformation
Fiscal Policy and Economic Growth
Publication details
- Journal / source
- Economics Letters
- Publisher
- Elsevier BV
- Volume
- 266
- Pages
- 113062–113062
- Publication date
- 29 May 2026
- Language
- EN