A Tax System Built on Labor Is a Tax System Built on a Melting Glacier

_{Guest contributor: Scott Santens writes Foreword for Humanity on Substack, advocates for Universal Basic Income, and founded the Income To Support All Foundation and the AI Pledge for Humanity.}

Something strange happened over the past ten months. The idea that the public should own a stake in the companies getting rich off automation went from fringe to seeming consensus, fast.

Bernie Sanders introduced the American AI Sovereign Wealth Fund Act, which would hit the biggest AI companies with a one-time 50% tax paid in stock and drop those shares into a fund that pays dividends to all of us. Trump signed an executive order creating a sovereign wealth fund, and his administration has been grabbing equity stakes along the way: in Intel, in MP Materials, in US Steel, and more recently with the big AI companies, with a household dividend floated as one use of the proceeds. Venture capitalist Vinod Khosla floated taking 10% of every public company for the people. And back in 2021, Sam Altman proposed almost exactly this in "Moore's Law for Everything": an American Equity Fund capitalized by taxing big companies 2.5% of their market value each year, payable in shares.

So the question is no longer whether the public should own a piece of the wealth we all helped build. People across the political spectrum have conceded that point. The question now is how.

And on the how, I think nearly everyone is making the same mistake.

They all want to build a giant pile of wealth.

I don't. I propose we build a faucet.

Every one of the aforementioned proposals ends the same way: a huge pile of stock sitting in a government fund, like Norway's or Alaska's, growing over time while possibly paying out a thin slice of itself each year. That's a fine model if your goal is to build a mountain of wealth.

But is that the best way to do it?

A fund that holds shares makes the government a permanent shareholder — picking which companies get a federal partner, accumulating votes and board seats, becoming both referee and player in markets it also regulates. We're watching that happen in real time, with equity grabbed selectively from some companies and not others. The machinery one administration builds to do good, the next one inherits to reward friends and punish enemies.

So here's my alternative. Require every large company above $100 million in revenue or value (public or private) to issue new shares equal to 1.5% of its value each year into a public fund. Not a check. Not the sale of a factory. Just newly minted stock, the same way companies already mint shares to pay executives or swallow rivals. At today's valuations that's about $1.76 trillion a year, or roughly $365 a month for every American, adult and child alike.

Then the fund slowly and steadily sells everything it receives over the next year. There are about 250 trading days in a year, so each day it sells 1/250th, dripped slowly across the day the way an algorithm quietly works a large order. The goal is to be the most boring participant in the market. The next year, the companies refill it, and we do it again.

Won't daily selling crater the market? We already run this exact machine in reverse. American companies spent about $1.1 trillion buying back their own stock in 2025, an all-time record, pulling shares out of the market to enrich the people who already own them. My dilution tax proposal is simply buybacks run backward: selling shares to enrich everyone instead. If the market can swallow a trillion dollars of buying, it can absorb a comparable amount of selling, especially as a slow, predictable daily drip.

And because the fund sells everything, it never builds a lasting stake in anyone. The public owns the wealth without the government owning the control. A wealth fund that hoards nothing and controls nothing — a wealth fund that never becomes a power grab.

It's also the most inescapable wealth tax ever designed. When you mint 1.5% more shares, every existing share is worth a hair less. It's inflation, but for stocks. Move to an island, hire the cleverest lawyers, route everything through shell companies — none of it matters. You cannot flee dilution. You cannot deduct it. It finds you wherever you are. And it's gentle: at 1.5%, the very wealthy don't lose wealth, they just compound a little slower — maybe 8.5% a year instead of 10%. They still get richer. They just share a sliver on the way up.

Our whole tax system leans on labor. Payroll and income taxes supply the bulk of federal revenue. So what happens as AI and robots do a growing share of the work? When a machine takes a job or just could, the paycheck disappears or shrinks and so does every tax that paycheck carried. The glacier is melting, and our entire tax system is standing on it.

The fix is to tax the things automation can't shrink and will instead grow: wealth and transactions. The stock dilution tax handles the wealth. A consumption tax handles the rest.

A value-added tax is a consumption tax already operating in every OECD nation except the US, but the variant I find most interesting is the Automated Payment Transaction tax as proposed by economist Edgar Feige — a tiny levy on every payment that clears the banking system. Every purchase, every trade, every wire, collected automatically by software at the moment of settlement. No forms, no returns. Fedwire alone moves over $1 quadrillion a year; add the card networks and the rest and US payment volume tops $1.5 quadrillion which is more than eighty times the consumption a sales tax would reach. A rate of roughly 0.12% on each side of a transaction raises as much as a 10% national VAT. Buy a $5 coffee, pay half a cent. Execute a $50 million block trade, pay $60,000 — which is exactly the point, because most transaction volume is finance, not coffee. The base is more skewed toward the rich than income itself.

And this already exists to a degree. Every time you swipe a card, the networks already skim 2% to 3% — automatically, invisibly, in code. The entire payments system is already a transaction-tax machine. It just collects for shareholders instead of for the public.

AI and robots don't earn wages but they are bought, and they do transact. A transaction tax captures the torrent of machine-to-machine payments the agentic economy is already starting to generate: software autonomously buying compute, data, and services from other software, billions of times a day, at speeds no payroll tax will ever touch. Human labor may decline as a share of the economy. Transactions won't. They'll explode. We should tax the thing that grows.

Neither of these is the single right answer, and that's the point. They stack.

The stock faucet would pay about $365 a month. A transaction-tax dividend can pay roughly $485 more. Add a refundable $375/mo tax credit replacing the standard deduction — another layer I've written about — and you're past $1,200 a month for every citizen and green card holder, adult and child, before anyone earns a dollar of wages. Hike the stock dilution tax and the transaction tax a bit and you reach a number that more than ends poverty in America and significantly reduces income and wealth inequality.

The people building AI keep telling us something like a universal dividend will be necessary. Elon Musk calls it "universal high income." Google DeepMind's Demis Hassabis says much the same. Fine. Let's hold them to it and let's fund it the right way, by taxing what AI grows instead of clinging to the personal income tax base it's shrinking.

We trained these machines on everything any of us ever wrote, living and long dead. We funded the science they stand on, going back generations. We are the data, the customers, and the reason any of it has any value at all. A dividend isn't charity, and it isn't radical. It's ours.

So let's not build another giant pile of stock. Let's build the faucet — and finally turn it on.