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212  \nAI, Automation and Taxation  \nSpencer Bastani  \nDaniel Waldenström  \nAUGUST 2024  \nPOLICY PAPER SERIES  \nIZA Policy Paper No. 212  \nAI, Automation and Taxation  \nSpencer Bastani  \nInstitute for Evaluation of Labour Market and Education Policy, IFAU, Uppsala University, Research Institute of Industrial Economics, IFN and CESifo  \nDaniel Waldenström  \nResearch Institute of Industrial Economics (IFN), CEPR, CESifo and IZA  \nAUGUST 2024  \nAny opinions expressed in this paper are those of the author(s) and not those of IZA. Research published in this series may include views on policy, but IZA takes no institutional policy positions. The IZA research network is committed to the IZA Guiding Principles of Research Integrity.  \nThe IZA Institute of Labor Economics is an independent economic research institute that conducts research in labor economics and offers evidence-based policy advice on labor market issues. Supported by the Deutsche Post Foundation, IZA runs the world’s largest network of economists, whose research aims to provide answers to the global labor market challenges of our time. Our key objective is to build bridges between academic research, policymakers and society.  \nIZA Policy Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author.  \nIZA – Institute of Labor Economics  \n\n| Schaumburg-Lippe-Straße 5–9 53113 Bonn, Germany | Phone: +49-228-3894-0\u003Cbr>Email: [publications@iza.org](publications@iza.org) | [www.iza.org](www.iza.org) |\n| --- | --- | --- |\n\nIZA Policy Paper No. 212 AUGUST 2024  \nABSTRACT  \nAI, Automation and Taxation*  \nThis paper examines the implications of Artificial Intelligence (AI) and automation for the taxation of labor and capital in advanced economies. It synthesizes empirical evidence on worker displacement, productivity, and income inequality, as well as theoretical frameworks for optimal taxation. Implications for tax policy are discussed, focusing on the level of capital taxes and the progressivity of labor taxes. While there may be a need to adjust the level of capital taxes and the structure of labor income taxation, there are potential drawbacks of overly progressive taxation and universal basic income schemes that could undermine work incentives, economic growth, and long-term household welfare. Some of the challenges posed by AI and automation may also be better addressed through regulatory measures rather than tax policy.  \nJEL Classification: H21, H30, O33  \nKeywords: AI, automation, inequality, labor share, optimal taxation,  \ntax progressivity  \nCorresponding author:  \nDaniel Waldenström  \nResearch Institute of Industrial Economics (IFN) Grevgatan 34  \n10215 Stockholm Sweden  \nE-mail: [daniel.waldenstrom@ifn.se](daniel.waldenstrom@ifn.se)  \n* This paper is forthcoming in the Handbook on Labour Market Transformations edited by Stefano Scarpetta and Stéphane Carcillo, Edward Elgar. We would like to thank Stefano Scarpetta for his insightful comments.  \n1. Introduction  \nThe digital transformation of the economy and, more recently, artificial intelligence (AI) are catalyzing profound changes in labor and capital markets. A growing research literature addresses a wide range of outcomes, such as productivity growth, industry concentration, the future of labor, income inequality both among workers and between workers and capital owners, and what the appropriate policy responses are. Despite these efforts, there remains considerable uncertainty about how the economy will be affected by AI and the broader trend toward automation in the production of goods and services.  \nThis chapter analyzes the implications of AI and automation on the taxation of labor and capital in advanced economies. The analysis begins with a review of the small but rapidly growing empirical research literature on ","cbCaimMVkhbKHhUd","https://ap.wps.com/l/cbCaimMVkhbKHhUd","pdf",532532,21,"English","# Introduction\n## Empirical implications for taxation\n## Theoretical framework for optimal taxation\n## Policy implications","[{\"question\":\"What does the paper analyze regarding AI and automation?\",\"answer\":\"It analyzes how AI and automation affect the taxation of labor and capital in advanced economies, including worker displacement, productivity, and income inequality.\"},{\"question\":\"How does the paper connect evidence to taxation design?\",\"answer\":\"It links empirical findings to theoretical research on optimal taxation of labor and capital income, then derives implications for tax policy.\"},{\"question\":\"What are the main tax-policy focus areas the paper discusses?\",\"answer\":\"The paper focuses on capital tax levels and the progressivity of labor taxes, while also highlighting potential drawbacks of excessive progressivity and universal basic income schemes.\"}]","AI, Automation and Taxation - Policy Paper No. 212 - Abstract | PDF",1792700239,53]