Raghuram Rajan proposes tax on AI tokens used by companies

Former Reserve Bank of India governor Raghuram Rajan has proposed a tax on the AI tokens companies use, alongside tax credits for firms that retrain and retain workers, as a way to manage potential job losses from artificial intelligence. Writing in a Project Syndicate column published on August 14, Rajan argued that existing tax systems can make automation financially more attractive than human labour. He cited the US as an example, where firms pay social-security contributions for employees but not for AI.

Rajan said AI-driven job displacement is coming, though its timing, magnitude and sectoral impact remain uncertain. Times Now reported that he suggested any tax on AI token usage could start at a low rate and increase gradually, and that foreign AI companies should also be brought within the framework. Livemint reported that Rajan argued governments must identify and address tax policies that favour machines over human labour, and that retraining credits could be tied to continued employment of the trained worker.

Rajan noted that corporate AI adoption is still cautious, with US Census Bureau data from late 2025 to mid-2026 showing overall business adoption at 17-20%, rising to 37% for firms with at least 250 employees. He warned that competitive pressures could accelerate adoption and displacement. He also said AI could create new jobs, improve productivity, and lower barriers to starting businesses.