[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-detail-83632-en":3,"doc-seo-83632-105":29,"detail-sidebar-cat-0-en-105":90},{"code":4,"msg":5,"data":6},0,"success",{"doc_id":7,"user_id":8,"nickname":9,"user_avatar":10,"doc_module":4,"category_id":11,"category_name":12,"doc_title":13,"doc_description":14,"doc_content":15,"file_id":16,"file_url":17,"file_type":18,"file_size":19,"view_count":4,"is_deleted":4,"is_public":20,"is_downloadable":20,"audit_status":20,"page_count":21,"language":22,"language_code":23,"site_id":24,"html_lang":23,"table_of_contents":25,"faqs":26,"seo_title":13,"seo_description":14,"update_tm":27,"read_time":28},83632,1649267921044,"Ava Thompson","https://us-avatar.wpscdn.com/avatar/1800007509477c92dfb?_k=1782875107921204101",8,"Research & Report","Taxing Artificial Intelligence","AI’s development and deployment can shift costs to others, creating environmental pressure on local communities, labor and creative displacement, and systemic risks from rapid frontier progress. Taxation is central to policy design, and debates increasingly ask whether tax instruments can address these harms. The paper evaluates the viability of AI taxation beyond Pigouvian correction: it can curb harmful activity, redistribute unevenly borne costs and gains, and fund regulatory capacity. It surveys tax instruments and assesses feasibility, measurement, incidence, leakage, and innovation trade-offs.","arXiv :2607 .02 144v 1 [ cs .CY] 2 Jul 2026  \nTaxing Artificial Intelligence  \nJuliette Faivre and Sarah H. Cen  \nCarnegie Mellon University  \nAbstract  \nWhile AI promises major benefits, its development and deployment can shift costs onto others, including environmental pressures on local communities, labor and creative displacement, and systemic risks from rapid frontier development. Taxation is an integral part of policy design, and recent academic, industry, and policy debates have begun to consider whether tax instruments can help address these harms. In this paper, we explore the viability of AI taxation. More broadly, AI taxation should not be understood only as Pigouvian correction. In the AI context, taxation can also correct harmful activity, redistribute unevenly borne costs and gains, and fund regulatory capacity. We discuss the main externalities associated with AI and survey possible tax instruments, including corporate income and rent-based taxes, consumption taxes on AI-related services, and excise instruments tied to specific AI activities. We further assess the benefits and pitfalls of these instruments, including feasibility, measurement problems, incidence, leakage, and innovation costs. Because AI externalities differ in nuanced ways, tax policy must be carefully designed and matched to the specific harms and policy objectives.  \nContents  \n1 Introduction 3  \n1. 1 Related work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4  \n2 Introductory Examples 6  \n2.1 Example 1: Rising water and energy costs for residents ...................... 6  \n2.2 Example 2: Impacts on creative work . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7  \n3 Background on Taxation 8  \n3.1 Basics and key terminology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9  \n3.2 Economic perspectives on taxation and externalities . . . . . . . . . . . . . . . . . . . . . . . 10  \n3.3 Main tax instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11  \n3.4 Challenges ............................................... 12  \n3.5 Counterarguments .......................................... 13  \n4 AI Externalities 13  \n4.1 Rising water and electricity prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13  \n4.2 Labor displacement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15  \n4.3 Other potential externalities   16  \n5 The Case for AI Taxes 17  \n5.1 Purposes that taxation can serve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17  \n5.2 Institutional and design advantages of taxation . . . . . . . . . . . . . . . . . . . . . . . . . . 19  \n6 Designing an AI tax 20  \n6.1 Design choices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20  \n6.2 Mapping externalities to tax bases and instruments . . . . . . . . . . . . . . . . . . . . . . . . 22  \n6.2.1 Possible tax designs targeted at labor displacement’s effect on payroll taxes . . . . . . 22  \n6.2.2 Possible tax designs targeted at data center externalities . . . . . . . . . . . . . . . . . 23  \n6.2.3 Additional settings ...................................... 24  \n6.3 Persistent question: AI supply chain and defining AI actors and activities ........... 25  \n6.4 Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26  \n7 Potential Pitfalls and Open Questions 26  \n8 Conclusion 28  \n1 Introduction  \nTaxation is an unpopular concept. It creates frictions in a free market, eats into earnings, and inflates the cost of transactions, often for benefits that are invisible to the taxpayer. Yet there are cases where taxation is justifiable, and artificial intelligence (AI) may be one of them.  \nThe growing momentum behind AI taxation makes this question increasingly urgent. In just a few years, AI taxation has moved from","cbCaigLQJOBu3vue","https://ap.wps.com/l/cbCaigLQJOBu3vue","pdf",768620,1,41,"English","en",105,"# Introduction\n# Related work\n# Introductory Examples\n# Background on Taxation\n# AI Externalities\n# The Case for AI Taxes\n# Designing an AI tax\n# Potential Pitfalls and Open Questions\n# Conclusion","[{\"question\":\"Why consider taxation in the context of artificial intelligence?\",\"answer\":\"AI development and deployment can impose costs on parties that do not share in its gains, including environmental pressures, labor and creative displacement, and systemic risks. These harms create a policy rationale for using taxation to address externalities.\"},{\"question\":\"How does the paper frame AI taxation beyond Pigouvian correction?\",\"answer\":\"AI taxation is not limited to correcting harmful activity via Pigouvian mechanisms. In the AI setting, taxation can also redistribute unevenly borne costs and gains and finance regulatory capacity.\"},{\"question\":\"What criteria are used to assess different AI tax instruments?\",\"answer\":\"The paper evaluates benefits and pitfalls including feasibility, measurement challenges, incidence, leakage, and possible innovation costs. Because AI externalities vary, tax design must match specific harms and policy objectives.\"}]",1784189401,103,{"code":4,"msg":30,"data":31},"ok",{"site_id":24,"language":23,"slug":32,"title":13,"keywords":33,"description":14,"schema_data":34,"social_meta":85,"head_meta":87,"extra_data":89,"updated_unix":27},"taxing-artificial-intelligence","",{"@graph":35,"@context":84},[36,53,67],{"@type":37,"itemListElement":38},"BreadcrumbList",[39,43,47,50],{"item":40,"name":41,"@type":42,"position":20},"https://docshare.wps.com","Home","ListItem",{"item":44,"name":45,"@type":42,"position":46},"https://docshare.wps.com/document/","Document",2,{"item":48,"name":12,"@type":42,"position":49},"https://docshare.wps.com/document/research-report/",3,{"item":51,"name":13,"@type":42,"position":52},"https://docshare.wps.com/document/taxing-artificial-intelligence/83632/",4,{"url":51,"name":13,"@type":54,"author":55,"headline":13,"publisher":57,"fileFormat":60,"inLanguage":23,"description":14,"dateModified":61,"datePublished":61,"encodingFormat":60,"isAccessibleForFree":62,"interactionStatistic":63},"DigitalDocument",{"name":9,"@type":56},"Person",{"url":40,"name":58,"@type":59},"DocShare","Organization","application/pdf","2026-07-16",true,{"@type":64,"interactionType":65,"userInteractionCount":4},"InteractionCounter",{"@type":66},"ViewAction",{"@type":68,"mainEntity":69},"FAQPage",[70,76,80],{"name":71,"@type":72,"acceptedAnswer":73},"Why consider taxation in the context of artificial intelligence?","Question",{"text":74,"@type":75},"AI development and deployment can impose costs on parties that do not share in its gains, including environmental pressures, labor and creative displacement, and systemic risks. These harms create a policy rationale for using taxation to address externalities.","Answer",{"name":77,"@type":72,"acceptedAnswer":78},"How does the paper frame AI taxation beyond Pigouvian correction?",{"text":79,"@type":75},"AI taxation is not limited to correcting harmful activity via Pigouvian mechanisms. In the AI setting, taxation can also redistribute unevenly borne costs and gains and finance regulatory capacity.",{"name":81,"@type":72,"acceptedAnswer":82},"What criteria are used to assess different AI tax instruments?",{"text":83,"@type":75},"The paper evaluates benefits and pitfalls including feasibility, measurement challenges, incidence, leakage, and possible innovation costs. 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