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Workers' Incentives and the Optimal Taxation of AI

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  • Jakub Growiec
  • Klaus Prettner
  • Maciej Szkr'obka

Abstract

We characterize the optimal tax policy in an economy with human manual and cognitive labor, physical capital, and artificial intelligence (AI). Extending the dynamic taxation setup of Slavik and Yazici (2014), we find that it is optimal to start taxing AI when cognitive workers start to consider switching to manual jobs. This threshold may be crossed once AI becomes sufficiently capable in substituting humans across cognitive tasks.

Suggested Citation

  • Jakub Growiec & Klaus Prettner & Maciej Szkr'obka, 2026. "Workers' Incentives and the Optimal Taxation of AI," Papers 2603.17898, arXiv.org.
    • Handle: RePEc:arx:papers:2603.17898
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    References listed on IDEAS

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    Cited by:

    1. Jakub Growiec & Klaus Prettner & Maciej Szkr'obka, 2026. "Redistributive Policies for the Times of Transformative AI," Papers 2609.14750, arXiv.org.

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    More about this item

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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