The case for taxing organisations that displace workers with AI

The advancement of Artificial Intelligence (AI) is not inherently problematic. Indeed, Generative AI (AI that can creatively generate outputs, like images, poems, and music) and Large Language Models (AI-powered systems trained on vast amounts of data and capable of performing natural language tasks) promise valuable boons. However, such kinds of AI pose medium to long-term challenges for the UK welfare system. The main challenge is that numerous work-related tasks are exposed to AI automation, and as AI advances and becomes cheaper over the decades, exposure will widen, and the financial incentive to replace workers will increase. Such workforce displacement could lead to a rapid uptake in, and dependence on, an already unfit welfare system (Gwilym et al. 2025). I argue that the sheer scale of social change AI will cause, especially through workforce displacement, requires us to seriously consider imposing a targeted taxation on companies that replace workers with AI. This taxation could fund large-scale reskilling programmes for displaced workers to re-equip and re-enter an AI-driven workplace.