U.S. Lawmakers Propose Competing AI Tax Plans Ahead of Midterms

U.S. lawmakers are pursuing competing approaches to taxing artificial-intelligence activity, targeting AI-token usage and corporate equity while scrutinizing data-center incentives and corporate tax deductions.

Rep. Greg Casar, D-Texas, introduced H.R. 10044, the AI Tax and Work Protection Act, on Aug. 6. The bill was referred to the House committees on Education and Workforce and Ways and Means.

H.R. 10044 would impose taxes based on AI-token usage or covered AI transactions. When the applicable unemployment rate is 5% or lower, the token-tax rate would be 2% and the transaction rate would be 3%. The rates would increase as unemployment rises.

The bill defines a token as a discrete unit of text, code, image, audio or video data processed by an AI model. It would direct the revenue to a Treasury trust fund and establish a Work Protection Administration within the Labor Department.

Sen. Bernie Sanders, I-Vt., introduced the American AI Sovereign Wealth Fund Act on June 18. Under the bill, qualifying AI companies would surrender half of their equity through a one-time tax, with that ownership transferred to a publicly controlled investment fund.

The measure would apply to companies with at least $200 million in annual gross receipts from qualifying AI businesses. At current valuations, the fund could be worth $7 trillion, while a 5% annual dividend could provide more than $1,000 to each person in the United States.

“Left unchecked, Artificial Intelligence and robotics threatens the jobs, privacy rights and mental health of every man, woman and child in America,” Sanders said.

Sen. Ron Wyden, D-Ore., released a draft white paper on Aug. 6 proposing the removal of certain data-center tax incentives and the creation of a Data Center Public Investment excise tax. The proposal does not specify a rate.

U.S. data-center construction has quadrupled over the previous four years, while hyperscaler spending on data centers is expected to reach roughly $700 billion in 2026.

“American communities are rightfully questioning whether the rapid buildout of data centers across the nation will benefit them,” Wyden said.

Sen. Elizabeth Warren, D-Mass., led letters dated Sept. 28 to Amazon, Meta, Alphabet and Microsoft seeking information about AI-related tax deductions, subsidies and lobbying connected to the 2025 One Big Beautiful Bill Act. The companies were asked to respond by Oct. 11.

The letters cited a more than $11 billion decline in Microsoft’s current federal tax expense between fiscal years 2025 and 2026 as pretax income rose $42.3 billion. Meta’s current federal tax expense fell by nearly $7 billion between 2024 and 2025 while pretax income increased by more than $15 billion.

“These tax breaks are not free—their cost has been imposed on American families via cuts to critical social services and a higher deficit,” Warren and the other senators said.

The measures remain proposed legislation, a draft policy document or oversight action rather than federal law. Their differing approaches cover AI-token usage, equity ownership, data-center incentives and corporate tax deductions.