Funding the POE

The research basis

The IMF blog Sharing the Gains of Automation: The Role of Fiscal Policy, published on 18 November 2021, is a core research reference for the POE. It examines how taxation and public spending can share the gains from automation.

The analysis compares taxes on capital income, excess profits, and robots, alongside a wage-tax cut for lower-skilled workers. Redistribution can reduce inequality, while some policies slow investment and output growth over time. Excess-profit taxation performs particularly well in its setting of firms with market power.

The underlying IMF working paper, For the Benefit of All, makes the model and assumptions available for scrutiny. Its conclusions depend on how automation, workers, and market power interact. It provides a basis for assessing trade-offs; the POE’s specific tax and spending proposals remain our own.

Planning for SI automation

SI means superintelligence. Here it describes future AI systems with capabilities beyond humans across a broad range of cognitive tasks. Our SI automation scenario combines those systems with capable robotics, allowing companies to automate most production tasks, including highly trained work.

Mass layoffs are a central risk to prepare for. If companies replace workers at large scale faster than new paid human roles expand, people can lose their livelihoods even as production grows. Education still matters, but further qualifications alone cannot ensure a job when the newly learned functions can also be automated.

The practical task is to establish funding before wages disappear. Tax revenue can sustain purchasing power and fund work that people value through Government institutions, Grants, and UBI. Deployment speed, costs, demand, and public choices determine the scale of displacement; this scenario is not a dated forecast from the IMF.

A contribution even when profits are low

A company can use productive assets, energy, land, and materials while reporting little or no profit and selling only to other companies. The POE therefore needs to examine tax bases beyond profits and household purchases. This is a further design question raised by the SI scenario.

Any proposal must define the activity, asset, or resource being taxed; how it is measured; and how it is treated when firms merge or trade across borders. It must also show who ultimately bears the cost. The 2021 analysis does not settle those design questions. The EU law page maps existing tools and proposed reforms.

Choosing the balance between growth and opportunity

Democracy can accept some slower automated investment to sustain a better life for people. The POE’s objective is income security, personal agency, valued work, and access to goods and services. The fastest possible expansion of automated production is one consideration in that decision.

The choice needs evidence: net public revenue, prices of essentials, resource use, and the income and opportunities people actually gain. Lost production can have real costs, so the balance should be measured and reviewed as capabilities and conditions change.

There are different policy judgments within the IMF’s published analysis. A June 2024 IMF article advises against a specific AI tax and favours stronger taxation of capital income and reconsidering incentives for displacement. The POE uses this debate to assess options; selecting the 2021 study as a core reference does not imply IMF endorsement of this framework.

Government institutions, Grants, and UBI

• Government institutions: fund public bodies that provide services and perform public duties, such as education, health, infrastructure, justice, and defence. They employ people, use automation, and purchase goods and services.
• Grants: fund companies and other organisations to carry out agreed activities, including valued human work. Recipients pay the people delivering that work under the programme’s terms.
• UBI: make regular, unconditional payments to individuals, providing an income floor and personal purchasing power. Democracy decides the amount and how it is funded.

These are connected policy routes: public institutions can administer grants and UBI as well as deliver services. A grant supports an activity; a public contract purchases goods or services. Additional help for people who need it can accompany UBI.

Where the money comes from

The POE can shrink even while the automated economy grows. If AI and robotics replace wage income, and the gains mainly reach a narrow group of owners, spending on other people's work can fall. The need for care, coaching, craftsmanship, culture, and community remains; the money to pay for it can disappear.

Sustaining the POE therefore requires a continuing, democratically governed flow from the prosperity created by AI and robotics into people's purchasing power and paid opportunities. This funds both people's own choices and useful work commissioned through public budgets. It must remain effective as the economy changes.

The scale of that public contribution depends on what people actually receive through wages, ownership, and existing public spending, and what their income can buy. Cheaper goods and new jobs can help; the loss of labour income is a risk to address, not an inevitable forecast. IMF analysis likewise identifies possible productivity gains alongside risks to employment, income distribution, and the tax base. See Fiscal Policy Can Help Broaden the Gains of AI to Humanity.

The proposed funding approach combines:

• Taxes on business and capital income: profits and income from ownership, with enforceable rules against avoidance.
• A broader base for public finance: an appropriate mix of income, consumption, land, and resource-related revenues as economic conditions change.
• Returns on public investments: where society has financed or acquired productive assets on transparent terms.

Democracy must decide the mix and rates. Each proposal must show who ultimately pays, how much it can sustainably raise, and its effects on prices and investment. Revenues lost elsewhere must be deducted before claiming new spending capacity.

The aim is to secure a public contribution from economic prosperity. Taxing every internal transaction or machine operation would count some activity repeatedly. See EU Law and Reform Options for POE for the relevant tax bases, legal limits, and proposed reforms.

What the funding should make possible

Democracy determines the balance between basic income, practical help, services, and paid opportunities. This includes the level of universal basic income, if adopted, the support people need to get on their feet, and the funding available for useful work. Sustaining and strengthening the POE is the purpose; democratic decisions set the amounts and arrangements within sustainable budgets.

Private businesses, public institutions, cooperatives, and associations can all provide opportunities. People can use modern technology in their work.

What democracy decides

Democracy sustains the POE. People, through accountable democratic institutions, decide how much prosperity contributes to the common budget, which opportunities and education paths receive public support, and the balance of basic income, practical help, services, and paid work. The proposals in this document are starting points for those decisions. People can test them, review the results, and change direction as evidence, needs, and priorities change. National and local communities can choose different approaches within applicable rights and common rules. Within that framework, individuals choose their own work, education, and enterprise.

People must be able to discuss those decisions, preserve and examine public evidence, think independently, and replace decision-makers through democratic processes. Funding decisions should be transparent and open to challenge. Access should not depend on political loyalty.

The democratic process can improve too. People can propose and democratically adopt better ways to discuss choices, include more voices, weigh evidence, make decisions, and hold decision-makers accountable. Changes should be open to scrutiny and revision, protecting the freedoms to think, discuss, and remember. Both POE policies and the methods used to choose them remain open to improvement.

From a principle to a funded programme

A funding proposal needs to identify who pays, the actual tax base, collection rules, sustainable net revenue, and the people or programmes it will support. A programme also needs customers or a public budget able to pay for useful work.

The EU law page distinguishes existing legal tools from proposed reforms. It covers corporate and ownership income, broader contributions, procurement, national programmes, EU funding, and the decisions required to pool resources.