Mirit Eyal (Alabama; Google Scholar) & Yonathan A. Arbel (Alabama; Google Scholar), Tax Levers for a Safer AI Future:
This Article argues that tax policy can become a powerful tool for the development of safer systems of artificial intelligence (AI). Investment in AI capabilities is at a fever pitch, drawing capital, talent, and computing resources from most sectors of the economy. While the development of capable AI systems promises princely rewards to their creators, investment in safety remains anemic, reduced to paltry budgets and safety-washing initiatives. This misalignment has produced a rapidly expanding capability-safety gap: the difference between what these systems can do and what they can do safely. We lack meaningful assurances that tomorrow's powerful systems will safeguard the life and dignity of individuals, withstand adversarial attacks, and function reliably in novel contexts. At the heart of this gap lies a simple, bitter truth: while the rewards from powerful models are private, the harms are socialized.
We term this the social misalignment problem and propose that tax levers can play a critical role in its resolution. Our proposed framework reconceptualizes the existing sprawling system of R&D credits to incentivize investments in AI safety. The framework integrates four mechanisms: (1) targeted rewards for basic and applied research on AI safety; (2) consumer credits for purchases of safe AI technology; (3) escalating tax penalties for non-compliance; and (4) redistribution of penalty-generated revenue to public safety research initiatives. This Article argues that such a framework offers a practical solution for embedding safety considerations within the economic architecture of AI development while preserving innovation incentives. Through careful calibration of fiscal levers, public policy tools can address the structural misalignment between private sector imperatives and public safety demands in emerging technologies.
Editor's Note: If you would like to receive a daily email with links to tax posts on TaxProf Blog, email me here.
