OpenAI investor calls for tax overhaul as AI reshapes jobs market
An early investor in OpenAI has called for a radical overhaul of the US tax system in anticipation that the rise of AI will necessitate a shift from taxing labour to taxing capital.
American businessman and venture capitalist Vinod Khosla has said that as the accelerated automation of the workforce fuels public anxiety over job loss, a sweeping measure to make near 125m lower- and middle-income American’s exempt from income tax would ease fears. He said the move would be supported by raising levies on capital gains.
“When I talk to people, the biggest thing is fear of AI taking their job by far,” Khosla said at a forum in Washington.
He told the Financial Times the disruption would be “the single biggest issue” in the 2028 US presidential election cycle.
AI to perform ’80 per cent of tasks in 80 per cent of jobs’
Khosla has previously warned that within 25 years, AI could perform 80 per cent of the tasks in 80 per cent of current jobs – a shift he believes will eventually make universal basic income a necessity.
The billionaire’s proposal involves eliminating federal income tax for those earning less than $100,000 and tax capital gains at the same rate as ordinary income, arguing that the current system gives “preferential treatment” to wealth over work.
Khosla doubled down on X, stating in a post that AI would “transform economies and need a rethink of capitalism and equity”.
“Labour portion of economy (vs capital) will decline sharply. Should we eliminate preferential treatment of capital gains tax and equalize to ordinary income? 40 per cent of capital gains taxes are paid by those with income >$10m/year!”
Khosla, who is a long-time Democratic donor, said that the Trump administration had “generally done a pretty good job” on AI policy, though he did voice sharp criticism of the former President’s character, citing a “complete lack of values of any sort” and a “negotiating style that destroys credibility”.
The latest AI warning from Khosla comes after Blackrock chief Larry Fink forecast that skilled trades like plumbing and electrical work will become more valuable while some office roles decline.
In an interview with the BBC, the asset manager boss claimed the US had “overdid” its push for young people to go to university and pursue white-collar careers, arguing the balance now needs to shift.
“I think what we did wrong… we really put judgement on so many jobs,” Fink said. “We need to be proud that a career can be just as strong in these fields of plumbing and electricians.”
Fink, who leads Blackrock with $14 trillion in assets under management, said the rise of AI is already changing the types of jobs in demand.