When Automation Meets Policy
WHY THIS PAPER EXISTS
Policymakers are increasingly debating whether AI and automation should be taxed to offset labor displacement. This paper explores why that instinct—while understandable—distorts economic incentives and risks long-term harm to productivity and growth. The goal isn’t ideological; it’s to pressure-test intuition using economic reasoning and examine what the data actually suggests.
CORE ARGUMENTS
Taxing automation distorts capital–labor substitution
Productivity growth is the primary driver of long-run wages
Penalizing AI risks slowing aggregate economic growth
More targeted policy tools exist to address displacement
READ THE PAPER
Why taxing AI feels intuitive, but fails economically.
A policy essay written for U.S. Treasury–level audiences on the economic risks of taxing AI and automation.
WHAT THIS REFLECTS ABOUT MY THINKING
Incentive-first problem framing
Comfort writing for institutional audiences
Long-term, system-level thinking
Translating economic theory into practical reasoning