Consumption taxes wouldn’t solve AI

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

A handful of problems prevent sales taxes from effectively reaching the hypothetical earnings of our imaginary Al. First, consumers are liable for sales taxes in most jurisdictions. Non-sentient feral Al would be a seller rather than a consumer, so a sales tax would leave the earnings of the Al unaffected in consumer-based jurisdictions. 3 3 In other words, even if transactions with the Al were subject to sales taxes, feral Al would remain undertaxed in comparison to human or corporate merchants in consumer levy states and transaction tax states first because the Al would never be a consumer and second because other merchants would be subject to both sales and income taxes. This would be true even if consumer levy states and transaction tax states enacted a privilege tax specifically on feral Al. Doing so would create parity for purposes of the sales tax but not the income tax. It also would be true in privilege tax states themselves, because once again the Al would not be liable for income taxes that other sellers must pay.

A second reason why sales tax on Al counterparty transactions is an insufficient stand-in for the income tax is that although the consumer is nominally liable for sales taxes in most states, the merchant is the designated collection agent for the tax.34 Feral Al may not have been programmed to collect and remit sales taxes and, even if it were (since we are dealing in fictions already), it likely would not be able to respond adequately to changes in the law. Third, there is no federal sales tax, so absent a sea change in federal tax policy, the federal government could not use sales taxes to reach feral Al even if the incidence of tax were not in question.

Sales taxes seemingly are not a good solution to the income tax problem.35 Even if sales taxes applied, this essay's primary inquiry- the question of philosophical support for an income tax on non- sentientferalAl-wouldremainunanswered.