- Tom Blomfield predicts AI will make income tax obsolete within 5 years as human labor is replaced en masse.
- He argues that current tax systems dependent on wages will be unsustainable as employment plummets.
- The proposed solution is taxing “compute”—the resources running AI, such as data centers and processing systems.
- AI can now perform narrow specialized tasks better than humans, even surpassing professor-level expertise in some fields.
- He predicts that by late 2026, AI may become more generalisable, expanding its labor replacement capabilities.
- Sectors like tax accounting may require almost no human involvement in the near future.
- Data from Adzuna shows entry-level job postings have dropped 35% since ChatGPT’s launch.
- Morgan Stanley warns the UK could be hit hardest because 81% of its economy relies on services.
- OpenAI suggests governments shift to taxing capital, such as corporate profits, real estate, or a “robot tax.”
- Currently, income tax and national insurance account for 42% of UK tax revenue, while property taxes represent only 4%.
- Implementing AI taxes faces difficulties due to international disputes, especially with US tech firms.
📌 Conclusion: AI is directly threatening the foundation of budget revenue as automation reduces employment, with data showing a 35% decline in entry-level jobs and the service economy accounting for 81% in the UK. Proposals to shift to taxing AI resources or assets could replace income tax, but implementation is complex due to political and global factors. If AI reaches generalisability by 2026, the current tax system may be forced to change rapidly.
