The Case for Adopting or Modernizing VAT Amid Economic Transformation

Global VAT Landscape: Six of the G7 countries and 37 out of 38 OECD countries implement national value-added taxes (VATs), with the United States being the notable exception.
Need for Consumption Taxation: As AI continues to reshape the economy, there is a potential decline in labor’s share of value production, making a shift towards consumption-based taxation, such as VAT, increasingly necessary to sustain core government functions.
Benefits of VAT Implementation: Value-added taxes are characterized as non-distortionary and somewhat self-enforcing, offering governments detailed insights into the economic production network, which could be crucial during periods of rapid technological and economic change, according to experts like John Horton from MIT.

Preparing for AI’s economic impact: exploring policy responses

Anticipating Economic Changes: As powerful AI systems become more integrated into the economy, a new timeline for their impact is uncertain. Policymakers are encouraged to begin discussions on potential economic policy responses to address various scenarios that AI’s evolution may present.
Three Categories of Policy Ideas: The proposed policy ideas are organized into three broad categories: (1) general policies applicable to most scenarios, such as workforce upskilling and tax reforms; (2) moderate acceleration responses requiring fiscal support for displaced workers; and (3) ambitious measures for rapid change, including sovereign wealth funds and modernized tax structures.
Call for Collaborative Engagement: With a commitment of $10 million to the Economic Futures Program, Anthropic aims to facilitate research and discussions on AI’s economic impacts, emphasizing the importance of proactive engagement among researchers, policymakers, and the AI industry to prepare for diverse future outcomes.