EU will need to tax AI 'workers' to keep funding human pensions - EUobserver

TEXT START: Every major technological shift reshapes not just the economy but the tax system that pays for it.

THE DISSECTION

The text correctly identifies the payroll-tax base as a structural casualty of AI automation. It also recognizes that profits are mobile, tax competition is politically enforced, and European states may inherit the social costs while foreign firms capture the gains.

But it reduces a civilizational break to a revenue-allocation problem. Its proposed solution is to move taxation from wages to corporate profits, strengthen OECD rules, and preserve welfare-state funding. That is fiscal triage, not system preservation.

The headline’s phrase “AI workers” is itself evasive. AI systems do not become wage earners replacing human taxpayers. They become productive assets controlled by owners. The displaced wage stream becomes concentrated capital income and economic power.

THE CORE FALLACY

The central error is treating the collapse of wage taxation as if it were merely a change in the location of taxable income.

Under the Discontinuity Thesis, the wage-to-consumption circuit is the load-bearing structure of post-WWII capitalism. Taxing profits can redistribute some surplus, but it cannot restore human productive participation, bargaining power, or economic necessity. It can fund transfers; it cannot recreate the social role of employment.

The article recognizes P1—AI replacing cognitive labor—and partially recognizes P3—shrinking access to economically necessary work. It largely ignores P2: institutions cannot reliably preserve large human-only economic domains once automated systems are cheaper and more capable. Its “tax the profits” answer assumes the state can remain sovereign over the surplus after the labor force has lost leverage. That is the precise point in dispute.

HIDDEN ASSUMPTIONS

• Corporate profits will expand enough, and remain taxable enough, to replace the disappearing payroll base.
• Multinational firms will tolerate effective taxation rather than relocate intellectual property, capital, platforms, and investment.
• States will coordinate successfully despite competing for the same firms and tax base.
• Taxable profits will accrue where automation imposes social costs rather than where ownership and accounting structures place them.
• Productivity gains will translate into public revenue instead of primarily enriching AI-capital owners.
• Welfare transfers can preserve social stability without restoring productive participation or political legitimacy.
• Governments retain enough bargaining power to tax the emerging Sovereigns after ordinary workers lose their economic indispensability.
• The fiscal problem can be solved without confronting ownership of AI infrastructure, energy, logistics, data, and compute.

These assumptions are not minor technical risks. They are the entire battlefield.

SOCIAL FUNCTION

Partial truth serving as transition management and ideological anesthetic.

The article is useful because it admits that AI attacks the tax base, rejects the fantasy that productivity alone fixes the arithmetic, and identifies profit-shifting as a real obstacle. But it makes the collapse appear administratively manageable: amend tax rules, close loopholes, preserve consumption, continue the welfare state.

That framing allows policymakers to discuss revenue instruments without discussing who owns the automated economy, who controls the infrastructure, and whether the displaced majority retains any power beyond petitioning the owners for transfers. It is elite self-exoneration in technocratic clothing: the system need only be recalibrated, not replaced.

THE VERDICT

The article diagnoses the bleeding but misidentifies the disease. Europe’s payroll-tax model is not merely outdated; it is tied to a labor circuit that AI is severing. Corporate taxation may buy time and finance a transition, but it cannot reverse the terminal loss of mass productive participation.

The proposed reforms are hospice care for the industrial welfare state. The decisive question is not whether Europe can tax AI profits. It is whether anyone other than the owners of AI capital will control enough of the productive surplus to remain viable. Without that control, Europe gets a thinner tax base, stronger Sovereigns, dependent Servitors, and a majority maintained through transfers rather than employed through necessity.