Data Center Tax? Senator Proposes Funding Worker Retraining Amidst AI Job Loss Fears

The signs that AI could lead to mass job displacement are already piling up: entry-level job postings in the U.S. have sunk 35% since 2023, mass layoffs have swept across Big Tech, and even AI leaders themselves are warning about what’s coming.

Backstage at the Axios AI Summit in Washington, Senator Mark Warner (D-VA) revealed that a venture capitalist recently told him he’s writing software investments down to zero, in large part due to the strides of Anthropic’s Claude, and a major law firm told him it’s not hiring first-year associates because AI can now handle much of the work once assigned to junior lawyers.

Warner believes the fear of AI-related job loss is "palpable," even as data from one AI company suggests AI hasn’t yet started taking jobs.

As a response, Warner proposes taxing the data centers powering the AI boom and use that revenue to help workers through the transition. The idea is gaining urgency as public anger toward AI and data centers grows. Warner doesn’t plan to support his colleagues’ bill on a data center moratorium, arguing that this would benefit China. Instead, he seeks to extract his "pound of flesh" from the data centers to address the underlying job loss fears.

Warner sees an obligation from the industry to help figure this out and help pay for it, questioning who should bear that responsibility.

Warner thinks the “easiest place to extract the pound of flesh is probably going to be from the data centers.” This could look like putting data center tax revenue toward training for new nurses or funding AI upskilling programs, so long as there’s a “tangible benefit to communities” as they navigate this economic transition AI companies have foisted on them.

Warner pointed to Henrico County, Virginia, which used the tax revenue from a local data center to kickstart a new affordable housing project.

According to a recent NBC News poll, AI has a lower public approval rating than Immigration and Customs Enforcement (ICE), with 46% of registered voters viewing AI negatively compared to only 26% viewing it positively.

In Virginia, that is playing out in a proposal to repeal the state’s tax breaks for data center buildouts, which cost the state and localities nearly $2 billion a year in lost tax revenue in one of the world’s largest data center markets.

Warner concludes that AI and data centers are “easy to demonize”.