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House Speaker Kevin McCarthy (R-Calif.) on Tuesday told reporters he opposes legislation to abolish the IRS and replace federal taxes with a 30% sales tax.

Why it matters: The move effectively kills the legislation, which was part of a deal McCarthy made with hardliners in his conference to secure the speakership this month.

Sometime during the next two years — we don’t yet know when — the House of Representatives will be hosting a public orgy. House Speaker Kevin McCarthy, R-Calif., has promised to hold a floor vote on the FairTax Act of 2023 (H.R. 25).

The promise was one of multiple concessions McCarthy made to the Freedom Caucus to become speaker. As we shall see, the FairTax is nothing if not an exuberant orgy of nontaxation.

It is sometimes said that a value added tax (‘‘VAT’’) would simplify taxation.16 A VAT is a kind of sales tax on gross receipts, except that a VAT entails lots of paper work along a chain of production and supply. The extra paper work improves compliance. VATs necessarily entail complexities. When adopted, the UK VAT had four categories of goods: normal tax, exempt, zero tax and mixed. For zero tax goods, taxpayers further along the production chain got credit even though no tax was paid. The whole system was administered by the Bureau of Customs and Excises which had a tradition of viewing every taxpayer as a smuggler.17 Even now, the European VATs have large and growing evasion problems they need to deal with.18 Net operating losses expire after 20 years. At 5%, a twenty year annuity is worth 3⁄8 of present value of a perpetuity. Deductions at 35% for 20 years would be worth 3⁄8 of 35% or about 20%. The calculation depends critically on discount rates, life of the business, future tax rates and other assumptions. VATs have no way to exempt the Little Match Girl at the cashier counter. It is also not all that simple to find the Little Match Girl by other means to give her a refund of VAT that we really do not want her to pay. Inevitably VATs get complicated as legislators try to avoid freezing little girls. For example, most states exempt from sales tax food for home consumption to help those with lower incomes, but they tax restaurant food, which affects those with higher incomes.19 Thus, caviar at $2,400 a pound is tax exempt, while a White Castle meal at $2.99 is taxable. In Texas, tax is due on candy but not on cake. Are Rice Crispies with marshmallows a starchy cake or a sweet candy? Popsicles are subject to tax or not depending on whether they are more or less than 50 percent fruit juice. Texas sales taxes also get complicated because of exemption for products covered by other taxes, e.g., natural resources. VATs inevitably become Rube Goldberg machines with very high elasticities across complicated dividing lines, as the tax adjusts to inequity of a simple VAT and to other kinds of taxes. Those lines yields a tax that does a great deal of dead weight damage.20 A VAT in this country, moreover, will not replace the income tax, but will be imposed on top of the income tax. That means no reduction in the complexities of the current income tax, nor pressure to improve it, but instead a whole new complicated tax system in addition to current complexities. The issues in the administration of a VAT do not overlap very well with compliance with an income tax, so that an addon VAT will require a new set of tax specialists for every business. In 1984, the Treasury estimated it would need another 20,000 IRS employees to administer a VAT.21 That implies that a VAT would also require another block-long limestone building in Washington DC. An add-on VAT is necessarily an increase in complexity. Since add-on VATs are not justified by simplicity, the surviving ‘‘justification’’ for an add-on VAT is just to shift the burden of tax from Uncle Scrooge to the little Match Girl. We can get a progressive consumption tax, more simply, with a ‘‘cash flow consumption tax.’’ A cash flow consumption tax would use the same tax officers, even the same Form 1040. All that would be needed to be changed from current law is a deduction for investment and disallowance of interest deductions.22 The VAT is offered instead of a cash flow consumption tax because a cash flow consumption tax would not naturally shift tax from Uncle Scrooge to the Little Match Girl, while VAT would. Beware of the VAT and the gifts it brings. Simplification is just a cover.

A unique feature of the federal tax system in the U.S. is its lack of a consumption tax component. Most other countries — developed and developing alike — use a value-added tax system, which adds incremental tax payments on goods and services at each stage of their production.

“For historical reasons, we've left consumption taxes — the taxes you would pay at the cash register — to the states through retail sales taxes,” Gentry said.

A clean VAT can be modified to factor in the variable utility of dollars for high- and low-income earners, but it is a Rube Goldberg machine. The distinctions get fine, unjust, and hard to enforce, and the lines themselves do economic damage. For example, most states exempt from sales tax food for home consumption to help those with lower incomes, but they tax restaurant food, which affects those with higher incomes.3 Thus, caviar at $2,400 a pound is tax exempt, while the White Castle meal at$2.99 is taxable. In Texas, tax is due on candy but not on cake. Popsicles are subject to tax or not depending on whether they are more or less than 50 percent fruit juice. Added tax on jewelry can reach the rich disproportionately. Still, when a VAT is modified to adjust to high and low incomes, the result is commodity taxes with very high elasticities, because there are close substitutes available for taxed items. Tax systems with high elasticities have high deadweight losses — people can shift to substitutes to avoid the tax, and as a result, the damage to private demand far exceeds the revenue the taxes raise. VATs with exceptions or variable rates can be hard to administer. VATs require high compliance costs from both taxpayers and government.4 They are bad vehicles for adjusting tax according to fairness or utility.

Like other tax systems, even a simple VAT—one that exempts few goods or services—has compliance risks and, largely as a consequence, generates administrative costs and compliance burden. For example, all of the study countries reported that they devoted significant enforcement resources to addressing compliance. Businesses whose taxable purchases exceed their taxable sales are entitled to a refund under a VAT, which makes VATs vulnerable to fraudsters creating phony invoices in order to falsely claim refunds. Also, similar to other taxes, adding complexity through exemptions of some goods or services and reduced tax rates generally decreases revenue and increases compliance risks because of the incentive to misclassify purchases and sales. Such complexity also increases the record-keeping burden on businesses and increases the government resources devoted to enforcement.

Canada’s experience administering a national VAT along with a variety of provincial VATs and sales taxes demonstrates that multiple arrangements in a federal system are feasible, but increase administrative costs and compliance challenges for both the governments and businesses. Businesses, particularly retailers, in provinces with a sales tax face greater compliance burdens than those in other provinces because they are subject to dual reporting, filing, and remittance requirements.

A consumption tax would also hurt small businesses disproportionately. Big businesses have systems in place to deal with new government compliance, like tax collection, and they always pass along expense increases to customers. Small businesses will be harmed because:

We aren't always able to pass along cost increases, even a mandated VAT.

In a recent post for the Slow Boring blog, Simon Bazelon and Milan Singh argue that raising taxes can be an effective way to reduce inflation. Unlike their criticisms of using interest rate policy to lower inflation (which are broadly correct), their proposal to raise taxes is unlikely to work in the manner they describe. In fact, it may even have the opposite of its intended effect.

To begin with, economists generally consider monetary policy to be more effective at fighting inflation than fiscal policy, which includes tax policy. Fiscal policy tends to be slow and inefficient, and too often it just redistributes money from one sector of the economy to another without greatly affecting aggregate demand. This explains why economists such as Valerie Ramie have found that government spending multipliers tend to be less than one in normal times (which means that one dollar of government spending increases GDP by less than one dollar).

Although the VAT would simplify the IRC and generate more revenue for the United States government, it is not a perfect tax system. It is commonly criticized as a regressive tax,^'" "tak[ing] a larger percentage from low-income people than from high-income people."^'^ Currently, the United States tax system is progressive, meaning that high-income people and businesses pay a larger percentage of the tax than low-income people and businesses.^'* Switching from a progressive tax system to a regressive tax system would change the balance of equities currently in place.^^' Changing to a regressive tax system would likely have substantial political ramifications because forty seven percent of tax filers do not pay federal income tax.^'* Washington politicians. Democrats and Republicans alike, will be hesitant to implement a tax system that will make them vulnerable in the next election.^" Historically, the VAT has been very unpopular, and foreign leaders who have enacted it experienced a backlash from their citizens.^*" Most notably, Japanese Prime Minister Yasuhiro Nakasone was defeated in his 1986 reelection bid months after he successfully implemented a VAT. The 1993 electoral defeat of Canadian Prime Minister Brian Mulroney is also credited to his passage of a VAT in 1991 .^*^ "Since the poor consume a higher percentage of their income than the well-to-do, they are necessarily going to pay more VAT as a percentage of their income than the well-to-do. There just isn't any getting around that fact."^*' The VAT is also criticized because its tax rate can be easily raised.^*'* Proponents of small government are concerned by the ease with which revenue with a low dead-weight cost can be raised under a VAT system.^*^ These critics argue that taxes will be easy to increase if they are insufficiently burdensome and that, to incentivize economic growth, rates need to be easily kept in check.^** Because many nations that have enacted a VAT continue to have budget deficits,^*' this argument has credence. "The deficits that remain year after year would lead to continuous calls for even higher taxes, which would lead to more fraud and bigger deficits."^^^ However, the fact that the VAT can easily raise revenue alone should not prevent its enactment. "Congress should end this cycle by simply restraining spending to historical levels and scrapping higher taxes, including the VAT."^^' Taxpayer fraud is another problem faced by nations that have enacted a Y^-p 290 theoretically, the VAT is designed as a self-policing tax.^" Because the total tax the government ultimately collects is the same, businesses have an incentive to make sure the previous businesses pay the correct tax so they do not get stuck with a higher tax bill.^'^ However, fraud still persists.^" In the European Union, Member states lose an estimated €60-100 billion per year due to fraud, primarily arising from the black economy, insolvencies, and 294 missing traders. The black economy represents economic transactions that occur with cash and go unreported.^'^ Accordingly, tax revenue is not collected on these transactions.^'* The black economy accounts for up to thirty percent of GDP in some EU Member States, and some studies show that enacting a VAT will drive more activities underground.'^'^Another source of fraud, insolvencies, results when a "supplier of the goods/services never accounts for the tax he has collected from his customer (due to his insolvency) and which the VAT identified customer then recovers."^'* Missing transfer fraud occurs when "taxpayer A charges VAT to taxpayer B and A never accounts for the VAT paid to it by B. B recovers the VAT paid to A on its VAT return."^" Other types of fraud exist as well, including invalid deductions of input tax and nonpayment of output tax.'"" These frauds will cost the United States money and could possibly lead to increased budget deficits."" Opponents of the VAT are also quick to point out that nations that have enacted the tax continue to have budget deficits.'"^ "If it passed a VAT, Congress would undoubtedly budget based on the expectation of receiving all the revenue it anticipates the tax raising."'"' However, it is unrealistic that the government will be able to collect all the money that is budgeted.^"" According to the Heritage Foundation, "When the revenue comes in short, as it surely would, the deficit would increase by the amount of the gap, and a substantial deficit would persist."''"' Although the average annual revenue shortfall of all Member States is 12 percent, some EU Members have a shortfall of up to 30 percent.^"* By contrast, in 2005 the United States had a twelve percent revenue shortfall.^"' • Many supporters of a VAT in the United States propose a 20 percent rate.^"^ Applying this VAT to the 2005 U.S. tax information, the United States would have generated $1.26 trillion in tax revenues, which would be a fifty percent tax increase for that year.^"' However, using the shortfall data from the European Union, the United States would have had a tax receipt shortfall of $ 156 billion (under the European Union average) and $390 billion (the percent amount that many nations faced).^'" "Annual shortfalls of these magnitudes would prevent a VAT from eliminating the deficit and lowering the debt."^" Furthermore, it takes a country several years to enforce properly the VAT after implementing the new system.^'^

European Union Member States are able to generate substantial revenue with the VAT, but the VAT also has presented Members with many challenges.^'* First, the VAT has become a vehicle of greater public spending for Member States.^" When the VAT first appeared in Europe in the 1960s, average government spending was about 30.2 percent of GDP.^^" Today, European Union Member States spend on average 47.1 percent.^^' In that same time period, the United States government spending rose from 28.3 percent to 35.3 percent.^^^ Additionally, average deficits have been higher in the European Union than in the United States since 1980.^^^ The increased debt and government spending has resulted in less job creation and lower levels of income for Europe.^^'* Over the last two decades, the U.S. economy grew one third faster than that of the European Union Member States.^" Finally, European Union Member States have struggled with VAT fraud,^^* resulting in an estimated loss of €60-6100 billion ^"

A sudden, drastic change in the tax base and tax rates would wreak havoc in all areas of the economy, and especially in the state and local government sector. 141 The tax code is currently a major consideration for all actors in the economy, be they investors deciding what to invest in, or local government finance officers deciding whether to borrow or tax to fund a particular project. Given that virtually all actors in the economy base their decisions at least partly on tax considerations, many people will be hurt economically if the tax treatment of their actions changes suddenly. 142

[*442] There has been a spirited debate in academic circles concerning whether there is a need for transition rules to soften the blow to taxpayers who made plans under one tax regime only to have those plans significantly altered by subsequent tax law changes. In the view of some scholars, such transition rules are economically wasteful since they amount to insurance policies protecting vested taxpayers against the repeal of tax preferences. 143 Because these insurance policies are funded by the public, the beneficiaries of the insurance have no incentive to respond to changing political and economic realities. Others have argued that forswearing transition rules will only make the situation worse by increasing political maneuvering and increasing the cost of tax preferences to the government to compensate beneficiaries for the lack of grandfathering protection. 144 It may be that the transition rules are irrelevant as a matter of economics or finance and that the real test for transitional relief is a political one. 145 One thing is certain: if the current tax scheme is repealed, the groups that benefited from that system will demand political relief. 146

While elements of UBI may be appealing in the abstract, in practice it's an inefficient, extremely expensive, and potentially harmful policy that would solve none of those three challenges. Let's start with concerns about the income gap in the US. If the goal is to design a progressive policy that better redistributes income, UBI is a terrible tool. Unlike programs crafted to specifically help people with low income and those with disabilities, a UBI program would, by design, spread payments across the widest possible base. This means that while the economically vulnerable would receive support, so too would middle- to upper-income families. Why give some money to everyone, rather than offer dedicated assistance to those who need it? Even if UBI payments were phased out and then capped for earners above a certain income, the program would still end up giving able-bodied working-age adults subsidies alongside families with low incomes, regardless of relative need. UBI by design fails to account for the elements of life that make families more or less in need of government support — such as having a child with a serious illness or a work-limiting disability oneself — and as such would result in a highly inefficient allocation of resources. Further, the likely fiscal costs of a UBI are staggering. Enacting a UBI that pays $10,000 to every US adult would distribute about $2.5 trillion in benefits each year. That's roughly 75% of the federal government's 2018 revenues. To fund a UBI program of this size, Congress would need to pass massive tax increases or spending cuts. Some proponents of UBI would fund the program, at least in part, by disbanding existing safety-net programs. This would be a disaster. Cutting a wide array of existing programs — such as the earned income tax credit (EITC), child tax credit (CTC), temporary assistance to needy families (TANF), supplemental nutrition assistance program (SNAP), and disability insurance — would cover only one-fifth of the cost of such a UBI and result in a massive loss of existing transfers to people with disabilities and families with children. This approach would exacerbate the needs of the most vulnerable members of society. Next, consider concerns about displaced workers and the threat of robots taking jobs. If the goal is to get people back to work, then UBI, again, is a terrible policy. Giving people unconditional cash payments does nothing to address the root causes of declining employment and wages among less educated people. Whereas a targeted wage subsidy would encourage work and increase take home pay, UBI discourages labor supply. Instead, we should spend money helping people invest in their own human capital and making it easier for them to get to work. We should spend money on promising career and technical education programs and help low-income workers pay for child care and transportation. All told, UBI is a sub-optimal and probably harmful policy response to all three of the challenges it purports to address. There are legitimate critiques to standard social safety net and welfare programs — they can be administered inefficiently and they aren't structured perfectly to fit the needs of today — but that doesn't mean they should be abandoned for a shiny policy idea taking Twitter by storm. Our country is facing serious and daunting economic challenges, and too many people feel left behind in today's modern capitalist economy. To address these challenges, we need to ground ourselves in reality by looking at the facts and designing programs that address the underlying problems. Candidates and policymakers should focus spending on targeted benefits and policies that support early-childhood education, skills training, subsidized daycare and housing, and other investments that support families and workers. Evidence shows that's much more likely to produce the desired social and economic outcomes for the American people than universal basic income.

Numerous alternatives to Basic Income have been proposed by both supporters and opponents of Basic Income. Te current means-tested and social insurance benefts systems are deeply embedded existing systems which are frequently argued for as viable alternatives to Basic Income. Tis chapter studies four additional alternatives. Benjamin Lef describes one of the most substantial existing alternatives to Basic Income: the United States’ Earned Income Tax Credit (EITC). He argues that the EITC could never be a true substitute for a Basic Income because it is work-tested, but that it could be reformed to achieve some of the benefts of a Basic Income by removing its family-status conditional aspects and making it individual, increasing its regularity of distribution, and removing its means-testing. Of the wide variety of currently unimplemented but possible future alternatives to Basic Income, Michael Story discusses Negative Income Tax and fnds that it would be difcult to administer; Andrew Percy discusses Universal Basic Services—an expansion of existing public services into additional policy felds—and fnds Universal Basic Services to be compatible with Basic Income; and Maciej Szlinder fnds a job guarantee to be a generally unsatisfactory alternative.

In the context of this chapter, ‘alternative’ does not necessarily mean that Basic Income and the alternative provision exclude each other as possibilities, and it might mean that Basic Income and the alternative could complement each other. It would be perfectly possible for Basic Income to work well alongside existing means-tested and contribution-based benefts, as in the illustrative Basic Income schemes discussed in Chapter 11. If a Basic Income were to be implemented in the US, then the EITC would be somewhat redundant. Negative Income Tax really is an alternative in the sense that no government would ever implement both of them. Basic Income and Negative Income Tax deliver the same relationship between earned income and net income, so no government that had implemented one of them would then implement the other as well—although if they had implemented a Negative Income Tax and discovered its administrative complexity they might decide to replace it with a Basic Income scheme. A job guarantee and Basic Income could both be implemented at the same time, and similarly additional universal services could complement a Basic Income scheme, particularly if the Basic Income scheme were revenue neutral and did not raise income tax rates by more than one or two percentage points.

In these heady days of progressive proposals for massive increases in the federal budget, such as the Democrats’ recently announced $3.5 trillion human infrastructure package, a timely paper has reopened an old debate with a new proposal for a guaranteed national income, in the form of a negative income tax (NIT). The NIT, first proposed in the 1970s, is one type of income guarantee. It provides a cash benefit to individuals — an income floor — that declines as their income from other sources increases. The authors claim that their plan would completely eliminate poverty in the United States, which would be a very big deal.

The United States currently establishes income floors for various groups of people, especially under Social Security, but the biggest gap has always been those of working age said to be able-bodied who for one reason or another are unable to earn much or any income. An important but limited response to this gap is the new expanded Child Tax Credit (CTC), which began distributing direct cash payments to parents earlier this month.

C. More Important Things to Do 1. Repair the income tax. Any revenue that could come from a new VAT would be better raised by repairing the income tax base. The income tax is not going away. A VAT, if at all cognizable by the political process, is cognizable only as a supplemental tax. European VATs, for instance, collect only just over one-sixth of total tax revenue.11 The United States would need to leave room for state sales taxes. It would also have to adopt a VAT in digestible increments. Because the income tax is going to be around, it must be fixed; indeed, fixing it makes more sense than implementing a VAT.

I help run the Shelf Project, which develops proposals to raise revenue by improving the fairness and efficiency of the income tax. I think we can raise a trillion dollars a year by adopting proposals, including those by the Shelf Project, that involve things we should do anyway.12 There is no need for a VAT on top of that. The income tax is in terrible shape. Hard-driving tax planners, an IRS just trying to follow the law and avoid trouble, and congressional lawmakers trying to get reelected have taken big chunks out of the income tax base. The real effective tax rate on various forms of capital is uneven.

Globalisation has lowered the market value of many workers’ skills to the point that the clearing price for some labour cannot provide a growing proportion of the populations of more developed countries with an income that meets the popular defnition of minimum living standards, even though it has also contributed to cheaper consumption bundles. Current solutions to this are costly, inefective, and overly complex, leaving many people stuck in poverty traps and fnancial insecurity. Means-tested benefts and social insurance systems assume stable employment and stable households, which are less and less the reality; means-tested benefts impose employment disincentives as they are withdrawn as earnings rise; fnding employment after a period of unemployment will often leave a household on means-tested benefts; and national minimum wages impose negative employment efects, particularly among the least skilled workers (Neumark and Wascher 2006).

What qualities would a replacement for the existing welfare system need in order to avoid repeating the mistakes of the past? It should • as far as possible replace costly alternative measures; • if possible, provide a basic foor standard of living; • be paid to individuals, not to households or heads of households; • be as administratively simple and cheap to operate as possible; • be secure and transparent to maximise the ability of claimants to plan and take risks; • avoid work disincentives where possible; • work with the grain of public opinion; and • maximise personal freedom and choice without creating moral hazards or violating social norms. Te answer might be a Negative Income Tax.

In order to address that issue, another alternative would be to modify the taxation of capital income. It appears that most tax systems around the world tend either to discriminate labor income in comparison to capital income, or at least entail favorable rules for capital income. For instance, in many countries, labor income is subject to progressive tax rates, while income from capital, notably capital gains, are either subject to a lower tax or, like in Switzerland, exempted from tax, to the extent they belong to private wealth.53 Labor income is also subject to social security contributions, or to payroll takes, like in the United States. By contrast, capital income, such as dividends, interests or capital gains usually do not contribute to the social security. The same is true for the corporate profit tax, which is in most cases exempted from any social security levies.

As a consequence, some commentators suggest – instead of taxing robots – to reform the tax system in order to bring back parity between income from labor and capital.54 Various solutions may be contemplated. First, the income tax on labor could be reduced. In particular, while in most systems, the social security contributions on labor is shared half between employers and workers, a repeal of such tax would arguably make sense because this administrative additional cost may create an incentive to use robots instead of human workers.55 This solution would at the same time increase the states’ revenues accruing from labor income and the financing issues would thus remain unsolved. Second, income from capital could be subject to a comparable burden of tax than the one on labor, and also to social security contributions. Third, the preferential treatment of capital gains toward ordinary income could also be modified. Finally, the introduction of a wealth tax could also be contemplated.56

Inherent in understanding AI are a few key terms, some of which are still conceptual in application but close to reaching practical adoption. Eventually, a digital twin will integrate with each person, adding vast intellectual and physical capabilities based on an individual’s own thinking and abilities, only better. This twin, and indeed much of life. will operate on more powerful smart phones. These smart phone-based digital twins will run people’s lives, determining what to think, watch, eat, read, experience, and more.7 The breadth of the changes to he brought about by AI technology is beyond ordinary human understanding (and is in part projected to develop without human involvement) and is not addressed in many current laws as written, including the Internal Revenue Code (IRC). As is typically the case in most countries, the U.S. tax base is heavily reliant on service income earned by individuals. In 2018, 51 percent of tax revenue raised was from individual income taxes; 35 percent was from payroll taxes (which are assessed on the wage or salary paychecks of most workers and are used to fund such programs as social security); 8 percent was excise, estate, and other taxes; and 6 percent was corporate income tax.8 Yet, AI is projected to replace many jobs globally, with estimates of how many jobs so affected varying widely. The McKinsey Global Institute has estimated that about 50 percent of work tasks around the world are currently automatable.9 However, McKinsey also estimated that 30 percent of work activities could be automated by 2030, displacing about 14 percent of workers, assuming rapid adoption of automation. McKinsey’s estimates fall in the middle of the prognosticators, demonstrating that such considerable changes are widely accepted. Importantly, for tax purposes, if humans are working much less, tax revenue will drop precipitately in the United States, and this change could occur in a meaningful way over the next 10 years.

The tax world as presently constructed follows a certain order through its own rule book, which in the United States is the IRC. Put simply, the underlying system codified in the IRC “follows the money,” meaning if someone gets paid for services, that payment gets taxed. Currently, tax revenues both support the U.S. government and its programs, along with incentivizing (or disincentivizing) certain behavior.

An objection to exploring income tax theories in the context of non- sentient feral Al may be that other taxes, such as natural resource or sales taxes, will suffice, so that the income tax may be reserved for people without compromising the integrity of the tax base. Although the goal of this essay is not to champion the taxation of feral Al, but rather is to explore what an Al-centered thought experiment can teach us about tax policy as it relates to humans, this section addresses the objection that income tax would not be needed in the case of non- sentient feral Al.

One method of taxing feral Al may be to subject its transactions to sales tax. Sales taxes typically are charged against the sales of goods and services to end consumers.2 6 Although there is no federal sales tax yet, they are commonly levied by the states.27 The tax typically takes one of three forms.2 8 A consumer levy is charged against customers but is collected by the seller, and it is the most common form of sales tax.2 9 A privilege tax falls upon the seller for the privilege of doing business in the state, but the incidence of this tax probably is shifted to the customer through pricing.30 Finally, a transaction tax is charged against the transaction itself, with liability for payment falling on the customer and liability for collection falling on the seller.31 In the case of feral Al, it is tempting to think that sales taxes in any of these forms might be sufficient to reach earnings. A sales tax is particularly attractive because, unlike the income tax, it does not turn on the Al's personhood or property rights. Instead, it is triggered by a transaction.3 2

We have outlined above the different ways in which AI or Robots can be defined for the purposes of legal regulation. At the same time, we stated that these approaches may differ in the definition of AI and Robots for tax purposes.

In this section, we would like to mention one of the possible approaches to the definition of the term "Robot" for tax purposes. For this purpose, we propose the use of the robot tax nomenclature.