When Vinod Khosla sat down with Fortune editor-in-chief Alyson Shontell in March and floated the concept of wiping out federal revenue taxes for the roughly 100 million-plus Individuals incomes lower than $100,000 a 12 months, it sounded just like the form of provocation solely a billionaire with nothing left to show may get away with. “I can’t be fired. I’ve never worried about a career. I don’t need more money at age 71,” Khosla stated.
A month later, OpenAI has made it clear that Khosla’s considering would be the rising consensus of Silicon Valley’s strongest voices on the best way to stop synthetic intelligence from tearing the social material aside.
On Monday, OpenAI launched a 13-page coverage paper titled “Industrial Policy for the Intelligence Age: Ideas to Keep People First,” wherein Sam Altman’s firm laid out a sweeping blueprint for financial reform on a scale it in comparison with the Progressive Period of the early 1900s and Franklin Roosevelt’s New Deal of the Thirties. The central thrust: as AI techniques method superintelligence—outlined as capabilities that surpass the neatest people—the present tax code, labor market, and social security internet are all dangerously unprepared for what’s coming.
The overlap with Khosla’s imaginative and prescient is tough to overlook.
The tax code as a battleground
Khosla’s March proposal on Fortune’s Titans and Disruptors of Trade podcast was elegant in its simplicity: remove the preferential tax fee on capital beneficial properties, tax all revenue—whether or not earned from a paycheck or an funding portfolio—on the similar fee, and use the windfall to exempt everybody incomes underneath $100,000 from federal revenue taxes solely. He estimated that 40% of all capital beneficial properties taxes are paid by folks incomes greater than $10 million yearly, making the mathematics work with out rising the general tax burden.
OpenAI’s blueprint lands in the identical territory, albeit via a barely totally different door. The corporate’s paper requires shifting the tax base away from payroll and labor revenue—the very income streams that AI threatens to hole out—and towards company revenue and capital beneficial properties. It additionally floats what many have termed a “robot tax,” proposing levies on automated labor to seize a share of the productiveness beneficial properties that might in any other case move completely to capital house owners.
Each Khosla and OpenAI framed the necessity for a significant coverage overhaul across the huge change arising from the implications of the exponential enchancment in AI instruments. OpenAI warns that as AI automates extra work, the wage and payroll tax income that funds Social Safety, Medicaid, SNAP, and housing help may collapse. Shifting to capital-based taxation isn’t simply equitable, it argues, it’s fiscally needed.
Each visions converge on the identical uncomfortable assertion: the American tax system was designed for an economic system the place most worth was created by human labor. That economic system is disappearing.
From one billionaire’s concept to a company blueprint
Khosla is just not a passive observer of OpenAI’s trajectory—he was an early investor within the firm. His argument that AI may automate 80% of present jobs by 2030 gives the financial backdrop in opposition to which OpenAI’s coverage paper reads much less like company positioning and extra like an alarm bell.
Throughout his Fortune interview, Khosla located the issue in phrases that transcend tax coverage. In an AI-driven economic system, he argued, the normal stability of revenue between labor and capital will tilt dramatically. “Capitalism was about economic efficiency,” he stated, “but if the need for efficiency goes away because of extreme abundance, then why focus on efficiency?”
OpenAI’s paper echoes that logic nearly beat for beat. Its most radical proposal is a nationally managed public wealth fund, seeded partially by AI firms themselves, that might put money into diversified belongings throughout the AI economic system and distribute returns on to Americans—a mechanism designed to present each particular person a stake within the know-how which may in any other case render their expertise out of date.
Khosla himself has endorsed the concept of a nationwide wealth fund, and the symmetry between his particular person advocacy and OpenAI’s institutional proposal suggests {that a} coverage framework is crystallizing throughout the AI trade’s higher echelons.
Critics aren’t shopping for it
Nonetheless, the truth that a significant VC and the corporate he invested in are singing the identical tune hasn’t silenced the skeptics. Anton Leicht, a visiting scholar with the Carnegie Endowment for Worldwide Peace, known as OpenAI’s paper “comms work to provide cover for regulatory nihilism”—large concepts floated to challenge accountability whereas the corporate builds at full velocity. The paper landed on the identical day The New Yorker printed a prolonged investigation elevating questions on Altman’s trustworthiness on issues of safety, a timing that didn’t go unnoticed.
And the political headwinds are fierce. Taxing capital beneficial properties at atypical revenue charges is a proposal that pushed Marc Andreessen to again Donald Trump after President Biden floated a plan to tax unrealized beneficial properties in 2024. OpenAI’s paper conspicuously avoids specifying a company tax fee, a diplomatic omission that implies the corporate is aware of the place the political landmines are buried.
The California experiment
The irony of Khosla’s place is that he’s making a case for daring federal tax reform whereas combating a rearguard motion in his residence state in opposition to what he considers a catastrophically misguided native experiment. California’s proposed Billionaire Tax Act would levy a one-time 5% tax on residents value greater than $1 billion—a measure Khosla has known as the conduct of “a junkie” chasing a one-time repair whereas completely damaging the state’s tax base.
Khosla’s counter-vision—federal reform that taxes capital extra aggressively whereas relieving the burden on working Individuals—is designed to be a coverage that billionaires can reside with and staff can vote for. As he put it: “They will vote for a candidate who says no taxes if you make less than $100,000.”
The clock is ticking
Each Khosla and OpenAI agree on at the least one factor: the window for motion is narrowing. Khosla predicted that structural tax reform will arrive earlier than 2040 and will turn out to be a defining difficulty within the subsequent presidential marketing campaign cycle. OpenAI’s paper requires computerized safety-net triggers that might develop advantages when AI displacement hits preset thresholds, an acknowledgment that the disruption could arrive sooner than any legislative course of can deal with.
Goldman Sachs analysis has estimated that AI is already reducing roughly 16,000 U.S. jobs per thirty days, with youthful staff bearing a disproportionate share. OpenAI itself warns of eventualities the place superior AI techniques turn out to be autonomous and self-replicating—techniques that, in its personal phrases, “cannot be easily recalled.”
Towards that backdrop, the query is now not whether or not the tax code wants to alter however whether or not Washington can transfer quick sufficient. Khosla, for his half, is betting the true battle can be fought in Congress, not in Sacramento. And now, with OpenAI’s 13-page doc in hand, he has probably the most highly effective firm in AI basically co-signing his thesis.
Whether or not that quantities to real coverage momentum or, as critics contend, an elaborate train in popularity administration would be the defining query of the political economic system of the AI age.
For this story, Fortune journalists used generative AI as a analysis device. An editor verified the accuracy of the knowledge earlier than publishing.
