H.R. 10044: AI Tax and Work Protection Act

This bill would create a new federal tax on the use of large artificial intelligence models, and use the money to fund job-creation and workforce programs.

AI tax

The bill adds an excise tax for certain companies and other people that are considered “covered persons.” In general, this means entities that:

• develop a “foundation model,”
• sell access to a foundation model, or
• modify an open-weight foundation model,

and that either earn revenue from covered transactions or use the model in a way that reduces their own workforce.

The tax would apply to “covered transactions,” which include:

• providing use of, or access to, a foundation model to an unrelated customer in the normal course of business, and
• using a foundation model internally, or selling/licensing that use to a related party, if it leads to workforce reduction.

The amount of tax would be based on the value of the AI tokens processed, or the consideration received for AI services, whichever is greater. The tax rate would vary depending on unemployment levels:

• when unemployment is at or below 5%, the tax would generally be 2% or 3%, depending on the formula used;
• when unemployment is between 5% and 7%, the rate would increase above those base amounts; and
• when unemployment is above 7%, the rate would rise further.

The bill also lets the Treasury Secretary adjust the higher-rate formula if unemployment above 5% is due to a war, pandemic, or other major economic shock unrelated to AI.

For this bill, a “foundation model” means a broad-purpose AI model trained on large amounts of data and a very large amount of computing power. “Tokens” are units of data the model processes, such as text, code, images, audio, or video.

Some uses are excluded from the tax, including AI use for research and development by governments, colleges, federally funded research centers, and certain nonprofit organizations.

The tax provisions would take effect one year after enactment.

Trust fund and spending

The bill would create a Treasury trust fund equal to 100% of the AI tax revenue. That money would be used to pay for the bill’s workforce and job programs.

New office at the Department of Labor

The bill would require the Secretary of Labor to create a new Work Protection Administration within 90 days. This office would run the grant program created by the bill.

Grant program for jobs

The new office would give competitive grants to states, local governments, tribal governments, schools, colleges, and certain nonprofit organizations to create jobs that must be performed by real people.

The bill says priority should go to projects that create permanent, full-time jobs, and, when the work is normally done by government, to state and local governments.

To qualify, grant recipients would need worker-protection policies, including:

• respect for workers’ rights to organize under labor law,
• notices informing employees of their rights and pay/benefit terms,
• recognition of a union or other representative if a majority of workers choose one,
• preference for hiring locally, and
• an exemption from these requirements for tribal governments.

Grant funds could be used for a wide range of public-service jobs, including:

• child care and early education,
• public education support,
• health care and public health work,
• elder care and disability services,
• housing construction and repair,
• homeless services,
• community violence prevention,
• scientific research support,
• transportation and infrastructure projects,
• arts, museums, archives, and libraries,
• environmental and climate projects,
• wildfire prevention and disaster preparedness,
• school and community facility upkeep,
• parks and public space maintenance,
• local news and journalism, and
• workforce training under existing federal job programs.

Workers hired with these grants would have to be at least 18 years old. The jobs would come with wage and benefit requirements, including:

• pay at least the highest of the federal minimum wage, state/local minimum wage, or a prevailing wage standard;
• health coverage comparable to the federal employee health plan;
• at least 12 weeks of paid family and medical leave; and
• paid leave accrual of 1 hour for every 30 hours worked, up to 56 hours per year unless the employer offers more.

The bill also bars grant-funded jobs from replacing existing workers, taking over the work of striking employees, or duplicating work already being done by current employees in a way that causes displacement.

The office would have to report annually to Congress on how many grants were awarded and how many jobs were created, including wage data.

Other administration and reporting

The bill would create an advisory committee to help guide the grant program. The committee would include federal officials, a Federal Reserve designee, an NLRB designee, a National Science Foundation representative, state governors or their designees, union representation, and economists.

The Bureau of Labor Statistics would also be required to study and report on the effects of artificial intelligence on the labor market, including not just job loss but also reduced hours, lower pay, or more temporary work. The bill authorizes $20 million per year from fiscal year 2027 through 2031 for this work.

Finally, the bill would allow up to 20% of the trust fund money to be used for workforce training and job programs under the Workforce Innovation and Opportunity Act.

Relevant Companies

• MSFT — Microsoft could be affected if its AI services or models fall within the bill’s tax definitions, especially where AI token usage is tied to revenue from customers.
• GOOGL — Alphabet could be directly affected through its AI model offerings and any taxable access or usage of foundation models.
• AMZN — Amazon could be impacted through AI services offered via cloud platforms if those services are treated as taxable covered transactions.
• META — Meta could be affected if it develops or modifies open-weight foundation models and monetizes access or use.
• ORCL — Oracle could be affected if it provides infrastructure or services connected to large AI model usage that falls under the tax rules.
• CRM — Salesforce could be affected if its AI products are structured as foundation-model access or services subject to the tax.
• IBM — IBM could be impacted through enterprise AI offerings that rely on foundation models and are sold to customers.