An AI Tax Boom Could Curtail America’s Debt. But Not Solve It: Andrew Duehren in NYT
Andrew Duehren argues that the fiscal consequences of a potential AI boom largely depend on how effectively the federal government transforms productivity gains into new tax revenues (“An AI Tax Boom Could Curtail America’s Debt. But Not Solve It,” New York Times, August 18). But America’s fiscal deterioration stems primarily from unsustainable spending growth on health care and Social Security, not insufficient tax revenue—and AI could make that problem worse.
Duehren correctly notes that AI could increase average life expectancy, which would raise spending on senior transfers. Medicare and Medicaid are open-ended entitlements whose commitments grow faster than the economy and inflation, as advances in technology and new drugs increase spending without cost-benefit analysis. And because Social Security benefits rise with real wages, faster productivity growth quickly translates into higher benefits for new retirees.
Rather than looking for ways to capture AI-driven gains through higher taxes, legislators should focus on slowing the growth of unsustainable health care and Social Security spending. That would strengthen the fiscal outlook while allowing Americans to benefit directly from the productivity gains AI generates.
Romina Boccia
The writer is the director of federal budget and entitlement policy at the Cato Institute in Washington, DC.
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