November 4, 2026
AI Doesn't Pay Taxes. So Who Pays for Us, and What Do We Do All Day?
When AI replaces workers who pay taxes, what replaces the taxes? And if we solve the money, what replaces the work? After 25 years at Dell and now running two small shops in Trinidad, I look at both questions and why small towns may already have part of the answer.
By Douglas H. Brown III
I spent 25 years at Dell Technologies, supporting enterprise customers with tens of thousands of employees. I watched technology reshape work from the inside. Now I run two small shops in Trinidad, Colorado, and build apps for small businesses. Some mornings I sit with my coffee and think about where all of this is heading.
This morning it was a simple question with no simple answer. When AI replaces workers who pay taxes, what replaces the taxes? And if the money gets solved, what replaces the work?
The problem has a name
Economists call it erosion of the labor tax base. Most of the money the federal government collects comes from work, through income taxes and payroll taxes.
The payroll tax is the FICA line on your pay stub. It is 15.3%, split between you and your employer, and it funds Social Security and Medicare. Those programs are pay-as-you-go: today's workers pay for today's retirees.
An AI system draws no paycheck, so it pays no FICA. If machines do a growing share of the work, less money comes in while more people need help. Social Security's trust fund is already projected to run short around 2032, which would force benefit cuts of about 22%. That projection does not include large AI job losses.
The warnings are coming from inside the industry
What surprised me is who is raising the alarm. In April 2026, OpenAI published a policy paper calling for taxes on automated labor, a shift of the tax burden from paychecks to capital, and a national Public Wealth Fund that pays AI returns to citizens. It even proposed safety-net programs that expand automatically when measured job losses cross set limits.
Bill Gates has renewed his call to tax robots the way we tax workers. Senator Bernie Sanders has proposed a robot tax to fund healthcare, housing and income support. Anthropic's CEO, Dario Amodei, has warned that AI could push unemployment to 20% and wipe out half of entry-level white-collar jobs.
Not so fast
A fair debate needs the other side, and it is a strong one. So far, the jobs data does not show a collapse. Confirmed AI-related job losses in the U.S. were around 55,000 through 2025, fewer than the roughly 120,000 AI-linked jobs created in 2024 alone.
Tax experts at a KPMG roundtable this year made another point. Many developed countries have shrinking working-age populations. In that world, AI may fill jobs nobody is available to do, rather than take jobs from people.
Then there is history. The tractor, the assembly line, the ATM and the personal computer were each supposed to end work. Each one changed it instead. Economists call the fear of a fixed amount of work the "lump of labor fallacy."
The counterargument is that AI is different. Earlier machines replaced muscle. This one replaces thinking, and it improves every few months. Both sides make serious points, and the honest answer today is that nobody knows.
Five ways to keep the lights on
If large-scale job loss does arrive, these are the main ideas on the table, along with the strongest objection to each:
A robot tax. Charge companies for work done by automation. Objection: it is very hard to define what counts as a robot, and no country has passed one. The EU rejected the idea in 2017.
Tax profits, not paychecks. Shift the load toward corporate earnings and capital gains so revenue follows the money. Objection: companies move profits across borders, and corporate tax is only about 9% of federal revenue today.
A citizen dividend. Alaska has paid every resident a yearly share of its oil wealth since 1982, and it is popular across party lines. AI profits could be treated the same way: citizens as shareholders, not charity cases. Objection: someone has to decide how big the fund is and who controls it.
A guaranteed income. More than 150 basic income pilots have run in the U.S. In Rochester, New York, people who got $500 a month were 26% more likely to be employed than a control group. Objection: pilots are small and short, and a national program would cost far more and could feed inflation.
Share the work. A shorter workweek spreads fewer hours across more people. Objection: small businesses like mine run on thin margins, and payroll is often the biggest cost.
None of these is a clean win. A real plan will probably mix several, and every mix will have trade-offs.
The question money can't answer
In 1930, the economist John Maynard Keynes predicted that his grandchildren might work only 15 hours a week. He thought the hard part would not be the economics. It would be learning how to fill our days well.
Suppose we solve the money. Every household has enough. What do we do on Monday morning?
A job gives most of us three things besides a paycheck:
Structure. A reason to get up, a place to be, a rhythm to the week.
Belonging. Coworkers, customers, a team, a role in the community.
Being needed. The knowledge that if you don't show up, something doesn't get done.
When I left Dell after 25 years, the paycheck was not the hardest thing to replace. It was the structure, and knowing people counted on me.
The pessimist and the optimist
The pessimist says people need work, and a check in the mail cannot supply meaning. Without the discipline of a job, some will drift and get into trouble, and idle towns decline. That fear deserves respect.
The optimist says much of our most important work has never been paid. Raising children. Caring for aging parents. Coaching a team, singing in a choir, running a food bank, keeping a festival alive. If machines take over the spreadsheets and the call queues, more of us might finally have time for the work that holds a community together.
Beyond the work we already do for free, there's the work we've never had time to imagine. When people are worried about rent, there is little room in their heads for anything else. Researchers who study scarcity have found that money stress takes up mental space, the way a dozen open browser tabs slow down a computer. Take that worry away, and people have room to get curious again. What would I learn if I had the time? What could I build, grow, write or fix?
Think of the hobbyist who becomes an expert, the retiree who finally takes the painting class, the neighbor who teaches kids to fish. Curiosity has always been one of the most productive forces we have. Many inventions started as someone's side project.
I think both are right, and here is where they meet. Income alone won't spark curiosity or purpose. People need places to feed it: libraries, community colleges, workshops, makerspaces, festivals, churches, mentors. A town that invests in those places gives freed-up minds somewhere to go. A town that doesn't may get exactly the drift the pessimist fears. The question is whether we start building now or wait for a crisis.
Why I'm hopeful
I see the answer forming in Trinidad already. I serve on the board of our blues festival, and everyone who makes it happen is a volunteer. Downtown is full of shopkeepers, artists and makers who chose their work for love as much as for money. None of that depends on a corporate payroll.
Small towns have always known how to find purpose outside a paycheck. We may turn out to be the model, not the leftovers.
The money question belongs to Congress, and it should start now, while there is time to get it right. The purpose question belongs to the rest of us. The machines may take some of the jobs. They cannot take the reasons we get up in the morning, unless we let them.
So I'll ask you: if you never had to work for money again, what would you spend your days doing? I'd love to hear your answer in the comments.
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