American businessman and venture capitalist Vinod Khosla, an early investor in OpenAI, has proposed a radical overhaul of the US tax system, anticipating the changes that artificial intelligence (AI) will bring to the labor market. Khosla argues that, given the growing concern about job losses due to automation, nearly 125 million lower- and middle-income Americans should be exempt from income tax. This move, according to Khosla, would be supported by raising levies on capital gains.

Khosla predicts that AI could perform 80% of the tasks in 80% of current jobs within the next 25 years, which, in his view, would make universal basic income a necessity. Khosla's proposal involves eliminating federal income tax for those earning less than $100,000 and taxing capital gains at the same rate as ordinary income, arguing that the current system gives preferential treatment to wealth over work.

Khosla, at a forum in Washington, stated that the biggest fear of people is that AI will take their jobs. According to Khosla, this disruption will be 'the single biggest issue' in the 2028 US presidential election cycle. In a post on X, Khosla reiterated that AI will 'transform economies and need a rethink of capitalism and equity'.

Khosla also noted that the labor portion of the economy will decline sharply versus capital. In his proposal, Khosla seeks to address the current imbalance and prepare for the changes that AI will bring to the labor market, seeking a fairer tax system that adapts to the new reality.

Khosla, a long-time Democratic donor, while praising the Trump administration's work on AI policy, criticized the former president's character, citing a 'complete lack of values of any sort' and a 'negotiating style that destroys credibility'. Khosla's AI warning comes after BlackRock chief Larry Fink forecast that skilled trades like plumbing and electrical work will become more valuable, while some office jobs may decline.

Fink, in an interview with the BBC, claimed that the US had 'overdid' its push for young people to go to university and pursue white-collar careers, arguing that a balance shift is now needed. 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.

In an interview with the BBC, Larry Fink, head of BlackRock, predicted that skilled trades, such as plumbers and electricians, will gain more value in the future, while some office jobs could become less important. Fink argued that the United States overemphasized college degrees and white-collar jobs, and that a shift in balance is needed.

Fink, who leads BlackRock, which manages $14 trillion in assets, noted that the rise of AI is already changing the most sought-after professions. This perspective highlights the need to adapt to a constantly evolving labor market driven by technological advancements.

Khosla's proposal seeks a restructuring of the tax system to adapt to the increasing automation and the impact of AI on the labor market. The goal is to mitigate anxiety about job losses and ensure a more equitable distribution of wealth. Khosla's initiative, supported by the elimination of income tax for certain sectors, seeks a fairer system in the age of AI.

The proposal is based on the prediction that AI will transform the economy, decreasing the importance of labor compared to capital. Khosla questions the current tax system's preference for capital gains and advocates for equalizing them with ordinary income. This proposal reflects the need to adapt economic policies to rapid technological changes.