A war-gaming exercise held at the International Monetary Fund’s Washington headquarters, involving 50 finance and technology experts, examined how AI could undermine tax systems built around taxing worker income. The core concern is that productivity gains from AI may accrue mainly to asset owners rather than workers, so corporate profits could rise even as income tax receipts stagnate because fewer people earn taxable wages. Some economists counter that the tax base would only erode if labor’s share of income fell dramatically and persistently, which they view as unlikely since displaced workers tend to transition into new occupations rather than permanently leave the labor market.
