OPINION:
Artificial intelligence is unleashing hysteria.
Critics claim that autonomous weapons systems, white-collar obsolescence and self-improving models pose existential threats to humanity.
Nearly 2,000 economists and researchers signed a warning that AI threatens job displacement, broader and more rapid than the Industrial Revolution.
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Enter stage right: corporate opportunists. Anthropic CEO Dario Amodei wants AI to be regulated to ensure safety and slow the pace of its development.
That would insulate and advantage big companies such as Anthropic, OpenAI, SpaceXAI and Google, because they have the resources to lobby and manipulate the regulators.
It could protect them from inexpensive Chinese open-weight models and U.S. startups struggling to raise capital to create American alternatives. Notably, Mr. Amodei is not much trusted by his tech-industry peers.
Enter stage left: Democratic politicians see an opportunity to further tax, regulate and rewire the American economy to suit their agendas.
California Gov. Gavin Newsom wants government-directed safety testing and a “kill switch” for models deemed unsafe. Sen. Bernard Sanders, Vermont independent, wants to seize a 50% stake in leading AI businesses to create a sovereign wealth fund.
No matter that the likes of OpenAI and Anthropic have negative free cash flows. As wards of the state, they could burn capital indefinitely.
Meta CEO Mark Zuckerberg counters that AI labs must make their models safe because corporate customers will not want to purchase products that could cause mishaps and ruin their business.
Mr. Zuckerberg is right. The imperative to become profitable and to avoid ruinous lawsuits will prove to be the best regulation.
Restricting and banning data centers and taxing computing that runs AI models for business applications and ordinary home use are gaining political salience.
Think about it: a meter on your computer to tax queries about arthritis remedies and recipes for blueberry pie!
How taxes should be structured to effectively slow job losses is tough to fathom, but a Wall Street Journal columnist has suggested that we rebalance the tax system overall to increase levies on capital.
AI is a big thing, but so were interchangeable parts, water-powered textile looms, canals, railroads, the automobile, electricity, mainframes and the personal computer.
All put huge swaths of humanity out of work and created new employment. We have no evidence that the AI build-out is any more or less than those.
Sadly, in 2025 and the first few months of 2026, the accelerating application of AI in businesses as mundane as Walmart coincided with a jobs drought that could as easily be traced to President Trump’s tariffs, wars and deportations.
Mr. Trump should send the economic professors, The Wall Street Journal and Walmart some $TRUMP memecoin for distracting us from those policy mistakes.
We are already seeing evidence of hiring picking up for AI-savvy college graduates, and the proposition that AI is changing work and creating as many new jobs as it destroys.
Taxing capital has many champions. Economists estimate that the effective direct marginal taxes on labor and capital are 27% and 14%, implying a bias toward technology over people.
The problem with that reasoning is that both businesses and individuals pay taxes on capital income.
When corporations earn profits, they pay taxes. When they distribute what is left to shareholders through dividends, the latter pay personal income taxes on those.
That raises the effective tax on capital to the sum of the two figures above.
When corporations buy back shares to boost share prices, shareholders pay capital gains taxes when they sell.
That raises the tax on most capital income above the 27% marginal tax rate on labor.
AI is enabling medium-sized companies such as By the Way Bakery in Pleasantville, New York, to streamline personnel management and logistics, helping them compete with large consumer products companies such as Mondelez International.
AI is lowering the bar for starting a new business by stripping away overhead and complexity in billing, customization and sales.
This year, the pace of new business formations has jumped dramatically, with AI spawning a whole new class of small businesses: the one-person enterprise with annual sales exceeding $1 million.
From his living room in Sausalito, California, Ben Broca sells AI tools to entrepreneurs. He uses AI to write emails, help debug code, answer customer queries, sign up new clients and pay refunds when problems arise.
His business, launched in December, is on track to post $10 million in revenue this year.
Taxing AI — by levying fees on compute, imposing heavier taxes on software and equipment, or slowing its pace through regulation — would be a direct assault on a sea change in small-business formation.
Vibrant Main Streets across the country once had small hardware stores, jewelers and so forth. Now, Main Street is reemerging online.
Of course, Mr. Sanders wants to seize control of that — just as New York City Mayor Zohran Mamdani threatens to kill off New York’s bodegas with city-run grocery stores.
Those enterprises — minting millionaires and supporting modest, working-class households — are anathema to socialists.
• Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.
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