From The Next Web · Darius Popa · · 1m
AI won't fix America's debt, Guardian analysis argues
Even rapid AI-driven growth would not solve the US deficit because capital gains are taxed less than wages, and tech firms need massive returns to justify their spending.
In brief
Even rapid AI-driven growth would not solve the US deficit because capital gains are taxed less than wages, and tech firms need massive returns to justify their spending. The White House hopes AI will boost growth enough to reduce US debt, but analysis shows even strong AI growth would have limited impact on…
White House bets on AI to cut debt
Treasury Secretary Scott Bessent is relying on AI to deliver three percent annual growth, a rate the US has rarely hit this century, according to Eduardo Porter's Guardian analysis.
The growth needed is much higher
The Committee for a Responsible Federal Budget says cutting the deficit to three percent of GDP by twenty thirty-six would need four point four percent annual growth.Balancing the budget would take seven point two percent.
AI's tax problem and the payoff gap
AI shifts income from workers to capital owners, taxed at half the rate of labour.
“Even if AI supercharged the economy, its impact on the government's finances would be muted.”
The big picture
The White House hopes AI will boost growth enough to reduce US debt, but analysis shows even strong AI growth would have limited impact on government finances because capital is taxed at half the rate of labour.
