By P Gosselin
German socialists keep thinking up creative ways to drive companies out and run the economy into the ground.
Online German BlackoutNews here reports on details of a proposal by the SPD Socialists Party parliamentary group (SPD-Bundestagsfraktion) to tax productivity gains resulting from the deployment of Artificial Intelligence (AI) to fund bleeding social programs.
Image by NTZ using Grok AI
The extreme left SPD socialists aim to secure new revenue streams (such as a potential “AI dividend”) for the welfare state to offset anticipated losses in payroll taxes and social security contributions if AI replaces human labor.
Although no specific tax rate has been set yet, the plan targets the extra revenue generated through automation, digitalization, and increased process efficiency.
How incompetent can policymaking get?
The initiative creates a conflict with Chancellor Friedrich Merz’s economic strategy, which claims to prioritize boosting competitiveness, encouraging investments, and accelerating productivity before discussing redistribution (“growth first, then redistribution”).
German corporate tax rates remain high internationally (at around 30.13% for corporations in 2025). While the federal government aims to reduce corporate burdens to attract investment, the proposed tax works in the opposite direction.
5 reasons it’s a bad idea
Opponents and economic critics argue that taxing AI-driven productivity gains presents several major drawbacks:
1. Implementing a tax specifically on productivity gains penalizes companies for improving efficiency. Businesses bear all upfront financial risks—purchasing AI infrastructure, data pipelines, computing power, and retraining staff—with no government support if the initiative fails. Taxing the returns when projects succeed distorts the risk-to-reward ratio.
2. Capital and tech investments are highly mobile. In a globalized market, companies choose locations based on energy costs, tax burdens, and overall return on investment. Given Germany’s existing high tax environment, introducing an extra levy on technological adoption could push domestic companies to relocate AI R&D or deter foreign investment altogether.
3. Taxing productivity gains before they materialize prioritizes revenue distribution over economic growth. By dampening the incentive to automate, the policy risks slowing total output—which ultimately limits the future tax base for standard corporate profits, wages, and consumption.
4. From a practical standpoint, defining and measuring “productivity gains purely derived from AI” is extremely difficult, How do we know if the productivity gains arise from AI or from better management, standard software updates, market shifts, or hardware upgrades creates immense administrative complexity?
Moreover, compliance costs for tracking AI-specific gains could burden small and medium enterprises (SMEs) far more than large corporations.
5. Many developed economies facing demographic shifts rely on AI and automation to maintain economic output despite a shrinking labor force. Taxing AI adoption disincentivizes technology that resolves labor shortages, risking structural stagnation.
Do these guys eat the ingredients of a cake before mixing them and baking it? That’s about the level of their thinking.
The Dhimmicrats are dreaming up ways to do the same thing here. They don’t care about the possible consequences of a transforming economy as long as the baksheesh is extracted. And when one of their “thought leaders” is dumber than any bartender I’ve ever met in a life spent doing research on the subject we could very well be in a heap of trouble soon.
We know all about Socialists in the UK…
“If it moves…TAX IT…”
Except, also, if it doesn’t move, TAX IT….
I read just the other day that another German car maker is laying off more people.
Germany is in a downward spiral, and German politicians seem oblivious to it. So it is like being addicted to something: You have to hit rock bottom before you have an awakening.
Too bad the German people have to hit rock bottom along with their delusional leaders.
Volkswagen recently announced they were laying off another 50,000 workers in addition to the 50,000 announced at the start of the year.
Reminds me of a comment an old friend, and excellent engineer, said when a company we were working for announced layoffs for the first time. “You can always tell if they’re serious when they layoff as many chiefs as indians.”
This is what happens when a government takes over a private business.
Then, the business goes out of business, because government bureaucrats don’t know how to run a business.
Consider your point with the DSA platform to have the workers run the companies.
The extreme left SPD socialists aim to secure new revenue streams…
Which parallels our own extreme left Labour government:
In one exchange following disappointing local election results, Lord Mandelson described the mood within Labour as “mutinous”.
Mr McFadden agreed, replying:
And they, the backbenchers, are the tail that wags the dog. They did for Starmer and they can do the same for Burnham.
Those new revenue streams will turn out to be as bone dry as a chalk stream at the end of a hot dry summer.
We are way over on the right of the Laffer curve – and it’s going to get worse.
The “funny” thing is that the SPD isn’t even the extreme left in Germany
as the Green Party and the Linke( = left) are to the left of the SPD.
These guys are officially the “moderate” lefties.
Germany is so finished.
The UK isn’t far behind.
It’s a race to the bottom with the ultra-left Uniparty Labor/Conservative/Liberal Democrats/Greens in UK
and the German Uniparty CDU / SPD/ Greens/ Linke/ FDP.
The Germans are leading the race as they can vote for the same Party under 5 different names to get the same leader as the UK.
Funny Note – in the USA there are many disgruntled voters who turned away
from the US 2 Party system advocating for the Green Party,
while the Green Parties everywhere else in the west turned out to be the most traitorous,destructive force of the Uniparty.
These “redpilled” guys absolutely know what a real alternative is.
It’s a bit like chosing a tactical nuke instead of fat man and liittle boy not knowing that the tactical nuke is a magnitude stronger.
Labour have a cunning new idea to solve problems – new legislation that acts retrospectively…. to any back date you choose.
I was astounded when I heard Rayner hinting at that. An absolutely stupid precedent to set.
It cannot be allowed to pass. If it does anything can be done to opponents as it suits the powers that be.
Curiously, the Human Rights Act could be the undoing of the government’s intentions.
Fortunately for us, the US constitution explicitly bans ex post facto laws.
This legislation would be Orwell on steroids if I’m understanding it correctly.
Todays legal activity could be tomorrows crime and put you in prison.( on the other hand It’s the consequential rewriting history evolution
of yesterdays ice age – todays global warming / / yesterdays MRNA therapy todays vaccine// yesterdays wondercure todays horsepaste)
Socialism is an ideology under which those who work are taxed in order to buy the votes of those who don’t want to work.
Taking the eggs from the Goose you are trying to kill before they are even laid –
is progressivism in an egg …nutshell.
Off topic and very weird
The Clancy case in the US has produced an amazing form of language:
One Clancy supporter’s disappointment has since gone viral. ‘As a non-practising white’, she said on TikTok, ‘I am surprised, and that changes the landscape of the conversation’.
…what in the world is a ‘non-practising white’? – Spiked
“A non-practicing white?” Is that like saying “I’m a vegetarian but I eat meat?” Or like saying “I’m a scientist but I believe in global warming.”
I think she’s deeply disappointed that she isn’t in the victim hierarchy – ie black etc
…. the BBC solved that problem in the 1950s – and they call normal non-racist people racists:
https://www.bbc.com/historyofthebbc/100-voices/people-nation-empire/make-yourself-at-home/the-black-and-white-minstrel-show
Doesn’t need to practice. She thinks she’s perfect.
Does she “black face?”
Was Miss Clancy then a practicing black while committing the crimes?
As a white person she would never get this much support from the usual suspect.
[It was] Off topic and very weird
This specific idea may be a bad idea. But doesn’t the central tenet hold?
If there is massive job destruction (and hence massive lost of tax revenues, not to mention the waste of human resource) and at the same time large companies are much more efficient , then wouldn’t it make sense to increase the tax on the companies. ?
I know there will be the “what about cutting expenditure” argument and I get that…but even so, wont a massive uptake in AI (if it happens) will be disruptive to the taxation model status quo?
A topic worth exploring.
“Taxing Productivity Gains Stemming From Using AI”
Is not the same as new tax levies on the corporations. As defined, it is narrow and specific and the specific productivity gains are impossible to measure.
Given a fixed corporate tax, if the corporation becomes more cost efficient it generates more profit. The profit is taxed at the fixed rate but the volume of money flowing into government coffers increases.
That is one side of the equation and that portion does not mean the equations balance.
Consider another model. The corporate uptake in AI results in massive job destruction. In this scenario, the corporation is required to pay the displaced workers at full pay with full benefits for some period of time, say 2 years. The obvious drawback is corporate recouping the investment expenditures that got AI involved. However, employee income taxes are paid and the tax model disruption is minimal. At the end of the interval corporate tax rates change and the now more profitable corporation has capital to pay off the investment debt plus more revenues to the government for the social adjustment or displaced workers who likely will be unemployed for an extended period.
Regardless of which side of the equation one addresses, yes, it will be disruptive to the taxation model status quo. On the flip side, that same taxation model is updated anually because there are always economic disruptions that affect it.
Whatever approach is taken, it must avoid massive step increases in consumer prices as such are known to trigger dangerous economic downturn spirals.
Your question could lead to hours, days, weeks, months, even years of intelligent discussion and be worth the time spent.
Unfortunately is will be sloganized and unthinking people will cause yet another social divide using something they do not and do not wish to comprehend. Much like “Climate Change.”
I’m in favor of electrical powered sanders for smoothing a wood board. The alternative is to pound rocks together to produce grit and rub it on the wood with your bare hands. My crew will be more productive than your crew.
Expect “AI” to change work and the people of the world will be better off. I’m pretty sure this is the consensus of 97% of reasonable thinking people.
Having seen PCs, cell phones, internet, social and digital media, my concerns are the unintended consequences. One of those concerns is authoritarian control of the masses by a few using AI capabilities. It’s not the tool. It is how the tool is used and by whom.
AI is software with a trendy name. But, it’s a potential source of tax revenue, so the socialists want in.
Seems the concept applied to CO2, that it can be quantified and taxed, is being applied to AI.
When one considers how many will be employed to accurately monitor and report the productivity gains via AI, there will be no unemployment issue and hence no tax revenue issue.
Germany is importing most of their energy. 67-70% of their energy is imported. Angela Merkel shut down all of their nuclear power plants after the TEP Fukushima disaster, in spite of the fact that Germany has not experienced a tsunami in recorded history. It is so difficult to build a new plant in Germany today that most expansions are built in Poland.
So now, the SPD wants to tax any benefits from AI. They seem to ignore the impediments that the German government has already put in place. AI companies are more likely to have offices in Warsaw then in Berlin. Data centers are more likely to locate in any country with cheaper electricity than Germany (electricity in Germany is higher than California).
The SPD has been losing voters. They are down significantly in this year’s Bundesland elections. With looney proposals like this, they hope to stop their slide.
It would much simpler to post a keep out sign against the evils of freedom to choose, risk taking, investing, technology, and non-conformism.
This is why global taxes and global tax authority is so important to them.
All Socialist/Marxist governments come into power and get continued funding by raping Capitalism.
Remember to specifically target American AI while ignoring China and your own. It’s like seizing America assets in foreign countries only to turn them over to Chinese control. It’s because they can against Americans while making lots of promises in their budgets to local voters. It’s called democracy of the damned.
Irrefutable rule of economics – the more a thing is taxed, the less of it you get.
Then should the German government pay its citizens for productivity losses due to regulation – such as shutting down their nuclear plants and allowing bunches of wind and solar generation which are parasitic to their grids?
No. It functions like a diode rectifier circuit.
There are lots of places I would like corporate money to go but government isn’t one of them. Throwing the money in a burn barrel would cause less damage and havoc.
The article and virtually all of the comments focus on the disincentives of such taxes.
There is nothing addressing the fact that such taxes are totally unnecessary, existing taxes would almost certainly the additional revenue from the increased economic activity anticipated without any of the disruption or disincentives.
What are the effects of productivity gains?
So, if AI delivers on the promises its proponents make, there will be significant additional tax revenue from existing taxes, therefore new taxes on anticipated productivity gains would actually be seriously counter-productive and due to the disincentives would actually result in less tax revenue than the do-nothing scenario.
NY state passed a tax law punishing “The Rich”. They began to leave NY in droves.
Later in an interview NY’s Governor pleaded for them to move back because they couldn’t couldn’t fund the socialist programs without them.
“Other Peoples Money” is the foundation on Socialism’s funding.
Then the leaders get power and get to live “in the farm house”.