If a business invests in building an AI system, they now have an asset, and the value of the business reflects the fact the business owns that software asset now - if someone were to buy the business they would get the AI software and all its potential to monetize that asset in the future, so of course it has value.
If its value grows beyond the value the business originally invested to acquire it, it is quite literally a capital gain.
Why do you think Anthropic is worth $175-$350bn? Where did that capital value come from?
Yes, that’s how a software business works. The OP seemed to be talking about how we need to reform tax due to worker replacement. Everyone is talking past each other.
Correct, building an AI is an asset, which can then be rented to other businesses.
However the thread revolves around employers replacing employees with AI. Given that the number of AI creators is minimal, and the number of companies replacing employees is large, it follows that most companies replacing employees are renting AI, they did not create it.
Hence, for those companies, AI is not an asset, it is an expense.
One way of taxing those companies would be to tax AI producers based on revenue, not profits. If 50% of revenue was tax, then, the costs of AI to the end-user would go up to cover that. So revenue would "double", but half would go to govt.
I am not a tax lawyer though, but I expect such a scheme is so radically different to the current tax regime, that is has precisely zero chance of being implemented like this.
Of course businesses have always leased equipment to reduce the need for labor. This isn’t materially any different than paying your neighbor to borrow his ox and plow so you only need one guy to work your field instead of three.
I guess to put AI vendors on an equal footing with human intelligence vendors (ie humans). Workers are taxed on their revenue - their gross earnings - not their profits.
If the point is to tax AI consumers then AI providers can collect that tax on behalf of the IRS.
Taxing the profit of AI companies is useless since profit is a number that is easily manipulated to 0. Taxing revenue is much more direct. Prices have to go up to cover the tax. Hence the consumer oays "more" and that more is passed onto the tax man.
Taxing profit is exactly why businesses pay so little tax - it's trivial to make "no profit". (For example if the IP is held in another jurisdiction with a lower tax rate, and is "licensed" by the company which wants to make no profit. )
Aren’t we then just nullifying the productivity gains that could be had from the technology though? Obviously some people want this, they want AI to be less competitive with human labour, but don’t we just fall behind other nations who don’t tax that way and allow maximum productivity gains in all the AI consuming businesses?
If its value grows beyond the value the business originally invested to acquire it, it is quite literally a capital gain.
Why do you think Anthropic is worth $175-$350bn? Where did that capital value come from?