Senator Kelly Proposes AI Tax Measures to Fund Displaced Worker Support

Senator Mark Kelly (D-Ariz.) recently introduced the “Make AI Work for Americans Act,” a legislative proposal aimed at establishing a federal trust fund to support workers displaced by artificial intelligence (AI) through new excise taxes on the burgeoning AI industry.

The bill, introduced in mid-September 2026, centers on the creation of an “AI Horizon Fund,” which would be financed by a trio of excise taxes targeting various aspects of AI development and deployment. These proposed revenue streams include taxing the large-scale use of public resources such as power, water, and land by AI operations, as well as profits derived from digital advertising tools powered by AI and broader AI-based revenue windfalls. Senator Kelly has also previously floated taxes on the “compute” used to train new AI models, an idea echoed by other proposals that suggest taxing large AI developers based on the value of tokens sold or product revenue, potentially with rates escalating alongside national unemployment figures. The Bipartisan Policy Center notes that such taxes would likely be passed on to AI users, a critical consideration for businesses integrating AI.

The “AI Horizon Fund” is designed to operate independently of Congress's standard appropriations process, dedicating its resources to comprehensive workforce retraining programs, paid service-to-career opportunities, and direct support for individuals whose jobs are rendered obsolete by advancing AI technologies. Senator Kelly emphasized that the fund aims to protect American jobs and ensure “shared prosperity” as AI becomes more integrated into daily life, stating that the costs of AI's societal impact should not be borne solely by families and workers.

Senator Kelly's push stems from a growing concern that Congress is not adequately preparing for the profound disruptions AI could bring to the American labor market and environment. He expressed a sense of urgency, likening the situation to a “master alarm light flashing” in a space shuttle, underscoring the need for proactive measures. “I kind of felt like we were lacking a real plan,” Kelly told Punchbowl News ahead of the report's release, adding, “I think we’re going to be regretful about it and say we should have gotten ahead of this.” He acknowledged that significant job loss hasn't materialized as rapidly as some predicted, but stressed that the technology's capabilities are advancing faster than anticipated, making preparation paramount.

The proposal has garnered support from organizations like Unidos US and Americans for Responsible Innovation, both of which highlighted the importance of investing in education, workforce training, and community resources to ensure inclusive AI leadership. However, the legislation faces an uphill battle in a Congress that has shown reluctance to enact significant AI regulation. Both former President Donald Trump and House Speaker Mike Johnson have voiced concerns that immediate government intervention and taxation could stifle the growth of the domestic AI industry, potentially ceding a competitive advantage to countries like China. AI labs themselves have pushed back on similar tax proposals, arguing that such levies, particularly on excess profits, could reduce their capacity to invest in crucial research and development.

For small and mid-sized businesses (SMBs) across the U.S., the implications of such legislation are multifaceted. While the “AI Horizon Fund” promises a more skilled and adaptable workforce, potentially easing recruitment challenges in a rapidly evolving technological landscape, the proposed excise taxes could translate into increased operational costs. If taxes on AI inputs or services are passed on to users, SMBs leveraging AI tools for efficiency, marketing, or customer service might see their expenses rise. Conversely, the availability of a robust, AI-ready talent pool could mitigate the need for extensive in-house training, offering long-term cost savings and improved productivity. The debate underscores a broader challenge for SMBs: how to harness AI's transformative power while navigating its economic and social ramifications.

From our vantage point at C&S Finance Group LLC, Senator Kelly’s proposal highlights a critical juncture for U.S. businesses, particularly small and mid-sized enterprises. While the notion of funding workforce support through AI taxes is well-intentioned, the practical implementation of such excise taxes could introduce new complexities into business operations and financial planning. We've seen firsthand how new tax structures, even those designed for specific industries, can ripple through supply chains and impact the cost of essential tools and services for businesses of all sizes. For SMBs increasingly reliant on AI-powered solutions for everything from workflow automation to customer relationship management, understanding the potential for increased operational costs and adapting financial strategies will be paramount. Our experience suggests that proactive financial risk management will be key to navigating these evolving regulatory landscapes. We regularly advise clients on anticipating and mitigating the financial impacts of legislative changes, helping them integrate new tax considerations into their long-term strategic planning. Businesses seeking to understand how potential AI tax measures could affect their bottom line and explore proactive strategies should contact C&S Finance Group LLC at csfinancegroup.com for expert guidance.

As the “Make AI Work for Americans Act” begins its journey through Congress, its future remains uncertain. The debate will likely continue to balance the imperative of fostering AI innovation with the societal responsibility of supporting a workforce in transition. Businesses, policymakers, and workers alike will be closely watching how this conversation evolves and whether a consensus can be reached on funding mechanisms to ensure AI's benefits are broadly shared.