WASHINGTON — Three House Democrats introduced legislation Thursday that would impose a new tax on major artificial intelligence (AI) companies and use the revenue to fund a federal jobs program designed to support workers displaced by automation.
The proposal, the AI Tax and Work Protection Act, was introduced by Reps. Greg Casar of Texas, Valerie Foushee of North Carolina and Sara Jacobs of California.
They say the measure is intended to ensure companies benefiting from rapid advances in artificial intelligence help pay for programs that protect workers whose jobs could be affected.
House Democrats Unveil AI Tax Proposal
Under the legislation, leading AI developers would pay taxes based on either the price of the AI tokens they sell or the revenue generated from AI products, depending on which calculation results in a higher tax bill.
The plan also includes a clause that would automatically raise the tax rate if the national unemployment rate climbs, tying the industry’s financial burden to the wider labor market.
Lawmakers said the tax revenue would finance a newly created federal agency known as the Work Protection Administration, which would focus on employment opportunities for workers displaced by artificial intelligence.
Greg Casar Says Current Tax Policy Rewards Automation
According to Casar, current federal tax policy encourages companies to replace workers with automation because employers pay payroll taxes on employee wages but face no comparable tax when using AI instead of human labor.
“Right now, the federal government is doing nothing to protect workers from the threat of AI mass unemployment,” Casar said in a statement.
“Our bill would protect American workers by making big AI companies pay their fair share.”
Casar has previously said the proposed employment program should mirror the Works Progress Administration created during the Great Depression, which employed millions of Americans through infrastructure, public works and community projects.
AI Job Loss Concerns Drive New Legislative Push
The legislation comes as lawmakers become increasingly worried about advances in AI that could replace jobs, increase corporate profits and reshape the labor market.
The proposal is part of a major series of Democratic efforts aimed at measuring and responding to AI’s impact on employment.
In June, Casar and Foushee introduced separate legislation directing the Government Accountability Office to study AI-related job gains, job losses and changes in the workplace, while Jacobs joined another proposal requiring companies and federal agencies to report layoffs linked to artificial intelligence.
Foushee also cited findings that employers identified AI as a factor in more than 54,000 job losses in 2025.
AI Tax Debate Expands Beyond House Proposal
The House bill follows another proposal introduced earlier this year by Sen. Bernie Sanders of Vermont.
Sanders’ legislation would require qualifying AI companies to pay a one-time 50% tax in company stock, with those shares transferred into a federally managed sovereign wealth fund intended to provide long-term public benefits.
Both proposals would take funds generated by artificial intelligence, but the House bill would direct that revenue to worker protection and employment programs, rather than creating an investment fund.
Labor Market Remains Stable Despite AI Concerns
Federal employment data so far has not pointed to large job losses directly attributable to artificial intelligence.
The Bureau of Labor Statistics reported the national unemployment rate stood at 4.2% in June, while employers added 57,000 jobs during the month.
Long-term unemployment, however, increased by 286,000 compared with a year earlier, reaching 1.9 million people.
Lawmakers introduced the proposal one day before the government was scheduled to release its July employment report, a closely watched indicator that could influence debate over AI’s effect on the labor market.
Republican-Controlled House Faces Decision on AI Tax Bill
The legislation faces difficult political odds in the Republican-controlled House of Representatives, where Democrats are in the minority.
Republicans currently hold 218 seats, compared with 212 held by Democrats, alongside one independent member and four vacancies.
The bill is expected to become part of broader congressional discussions over AI regulation, workforce policy and the federal government’s response to rapid advances in artificial intelligence.
