Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1501: AI, Automation, and Taxation

Spencer Bastani () and Daniel Waldenström ()
Additional contact information
Spencer Bastani: Institute for Evaluation of Labour Market and Education Policy (IFAU), Uppsala, Postal: and Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Daniel Waldenström: Research Institute of Industrial Economics (IFN), Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden

Abstract: This chapter examines the implications of Artificial Intelligence (AI) and automation for the taxation of labor and capital in advanced economies. It synthesizes empirical evidence on worker displacement, productivity, and income inequality, as well as theoretical frameworks for optimal taxation. Implications for tax policy are discussed, focusing on the level of capital taxes and the progressivity of labor taxes. While there may be a need to adjust the level of capital taxes and the structure of labor income taxation, there are potential drawbacks of overly progressive taxation and universal basic income schemes that could undermine work incentives, economic growth, and long-term household welfare.

Keywords: AI; Automation; Inequality; Labor Share; Optimal Taxation; Tax Progressivity

JEL-codes: H20; H21

Language: English

19 pages, October 3, 2024

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