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When Vinod Khosla sat down with Fortune editor-in-chief Alyson Shontell in March and floated the idea of wiping out federal income taxes for the roughly 100 million-plus Americans earning less than $100,000 a year, it sounded like the kind of provocation only a billionaire with nothing left to prove could get away with. \u201cI can\u2019t be fired. I\u2019ve never worried about a career. I don\u2019t need more money at age 71,\u201d Khosla said.\u00a0<\/p>\n
A month later, OpenAI has made it clear that Khosla\u2019s thinking may be the emerging consensus of Silicon Valley\u2019s most powerful voices on how to prevent artificial intelligence from tearing the social fabric apart.<\/p>\n
On Monday, OpenAI released a 13-page policy paper titled \u201cIndustrial Policy for the Intelligence Age: Ideas to Keep People First,\u201d in which Sam Altman\u2019s company laid out a sweeping blueprint for economic reform on a scale it compared to the Progressive Era of the early 1900s and Franklin Roosevelt\u2019s New Deal of the 1930s. The central thrust: as AI systems approach superintelligence\u2014defined as capabilities that surpass the smartest humans\u2014the existing tax code, labor market, and social safety net are all dangerously unprepared for what\u2019s coming.<\/p>\n
The overlap with Khosla\u2019s vision is hard to miss.<\/p>\n
The tax code as a battleground<\/p>\n
Khosla\u2019s March proposal on Fortune\u2019s Titans and Disruptors of Industry podcast was elegant in its simplicity: eliminate the preferential tax rate on capital gains, tax all income\u2014whether earned from a paycheck or an investment portfolio\u2014at the same rate, and use the windfall to exempt everyone earning under $100,000 from federal income taxes entirely. He estimated that 40% of all capital gains taxes are paid by people earning more than $10 million annually, making the math work without increasing the overall tax burden.<\/p>\n
OpenAI\u2019s blueprint lands in the same territory, albeit through a slightly different door. The company\u2019s paper calls for shifting the tax base away from payroll and labor income\u2014the very revenue streams that AI threatens to hollow out\u2014and toward corporate income and capital gains. It also floats what many have termed a \u201crobot tax,\u201d proposing levies on automated labor to capture a share of the productivity gains that would otherwise flow exclusively to capital owners.<\/p>\n
Both Khosla and OpenAI framed the need for a major policy overhaul around the massive change arising from the implications of the exponential improvement in AI tools. OpenAI warns that as AI automates more work, the wage and payroll tax revenue that funds Social Security, Medicaid, SNAP, and housing assistance could collapse. Shifting to capital-based taxation isn\u2019t just equitable, it argues, it\u2019s fiscally necessary.<\/p>\n
Both visions converge on the same uncomfortable assertion: the American tax system was designed for an economy where most value was created by human labor. That economy is disappearing.<\/p>\n
From one billionaire\u2019s idea to a corporate blueprint<\/p>\n
Khosla is not a passive observer of OpenAI\u2019s trajectory\u2014he was an early investor in the company. His argument that AI could automate 80% of current jobs by 2030 provides the economic backdrop against which OpenAI\u2019s policy paper reads less like corporate positioning and more like an alarm bell.<\/p>\n
During his Fortune interview, Khosla situated the problem in terms that go beyond tax policy. In an AI-driven economy, he argued, the traditional balance of income between labor and capital will tilt dramatically. \u201cCapitalism was about economic efficiency,\u201d he said, \u201cbut if the need for efficiency goes away because of extreme abundance, then why focus on efficiency?\u201d<\/p>\n
OpenAI\u2019s paper echoes that logic almost beat for beat. Its most radical proposal is a nationally managed public wealth fund, seeded in part by AI companies themselves, that would invest in diversified assets across the AI economy and distribute returns directly to American citizens\u2014a mechanism designed to give every person a stake in the technology that might otherwise render their skills obsolete.<\/p>\n
Khosla himself has endorsed the idea of a national wealth fund, and the symmetry between his individual advocacy and OpenAI\u2019s institutional proposal suggests that a policy framework is crystallizing within the AI industry\u2019s upper echelons.<\/p>\n
Critics aren\u2019t buying it<\/p>\n
Still, the fact that a major VC and the company he invested in are singing the same tune hasn\u2019t silenced the skeptics. Anton Leicht, a visiting scholar with the Carnegie Endowment for International Peace, called OpenAI\u2019s paper \u201ccomms work to provide cover for regulatory nihilism\u201d\u2014big ideas floated to project responsibility while the company builds at full speed. The paper landed on the same day The New Yorker published a lengthy investigation raising questions about Altman\u2019s trustworthiness on safety issues, a timing that did not go unnoticed.<\/p>\n
And the political headwinds are fierce. Taxing capital gains at ordinary income rates is a proposal that pushed Marc Andreessen to back Donald Trump after President Biden floated a plan to tax unrealized gains in 2024. OpenAI\u2019s paper conspicuously avoids specifying a corporate tax rate, a diplomatic omission that suggests the company knows where the political landmines are buried.<\/p>\n
The California experiment<\/p>\n
The irony of Khosla\u2019s position is that he\u2019s making a case for bold federal tax reform while fighting a rearguard action in his home state against what he considers a catastrophically misguided local experiment. California\u2019s proposed Billionaire Tax Act would levy a one-time 5% tax on residents worth more than $1 billion\u2014a measure Khosla has called the behavior of \u201ca junkie\u201d chasing a one-time fix while permanently damaging the state\u2019s tax base.<\/p>\n
By some estimates, more than $1 trillion in billionaire wealth has already left California in anticipation of the ballot measure. Google co-founders Larry Page and Sergey Brin have reportedly taken steps to sever ties with the state. Even Gov. Gavin Newsom has said the measure \u201cmakes no sense.\u201d<\/p>\n
Khosla\u2019s counter-vision\u2014federal reform that taxes capital more aggressively while relieving the burden on working Americans\u2014is designed to be a policy that billionaires can live with and workers can vote for. As he put it: \u201cThey will vote for a candidate who says no taxes if you make less than $100,000.\u201d<\/p>\n
The clock is ticking<\/p>\n
Both Khosla and OpenAI agree on at least one thing: the window for action is narrowing. Khosla predicted that structural tax reform will arrive before 2040 and could become a defining issue in the next presidential campaign cycle. OpenAI\u2019s paper calls for automatic safety-net triggers that would expand benefits when AI displacement hits preset thresholds, an acknowledgment that the disruption may arrive faster than any legislative process can handle.<\/p>\n
Goldman Sachs research has estimated that AI is already cutting roughly 16,000 U.S. jobs per month, with younger workers bearing a disproportionate share. OpenAI itself warns of scenarios where advanced AI systems become autonomous and self-replicating\u2014systems that, in its own words, \u201ccannot be easily recalled.\u201d<\/p>\n
Against that backdrop, the question is no longer whether the tax code needs to change but whether Washington can move fast enough. Khosla, for his part, is betting the real battle will be fought in Congress, not in Sacramento. And now, with OpenAI\u2019s 13-page document in hand, he has the most powerful company in AI essentially co-signing his thesis.<\/p>\n
Whether that amounts to genuine policy momentum or, as critics contend, an elaborate exercise in reputation management may be the defining question of the political economy of the AI age.<\/p>\n
For this story,\u00a0Fortune\u00a0journalists used generative AI as a research tool. An editor verified the accuracy of the information before publishing.<\/p>\n
#Sam #Altman #Vinod #Khosla #agree #break #tax #code #Heres #fix<\/p>\n","protected":false},"excerpt":{"rendered":"
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