AI Tax and Work Protection Act

Full Bill Text

[Congressional Bills 119th Congress] [From the U.S. Government Publishing Office] [H.R. 10044 Introduced in House (IH)] <DOC> 119th CONGRESS 2d Session H. R. 10044 To impose a tax on artificial intelligence token usage and establish a Work Protection Administration within the Department of Labor, and for other purposes. _______________________________________________________________________ IN THE HOUSE OF REPRESENTATIVES August 6, 2026 Mr. Casar (for himself, Mrs. Foushee, and Ms. Jacobs) introduced the following bill; which was referred to the Committee on Education and Workforce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned _______________________________________________________________________ A BILL To impose a tax on artificial intelligence token usage and establish a Work Protection Administration within the Department of Labor, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE; TABLE OF CONTENTS. (a) Short Title.--This Act may be cited as the ``AI Tax and Work Protection Act''. (b) Table of Contents.--The table of contents for this Act is as follows: Sec. 1. Short title; table of contents. TITLE I--IMPOSITION OF TAX ON ARTIFICIAL INTELLIGENCE TOKEN USAGE Sec. 101. Imposition of tax on artificial intelligence token usage. TITLE II--TRUST FUND Sec. 201. Establishment. Sec. 202. Use of funds. TITLE III--OFFICE OF JOB CREATION AT DEPARTMENT OF LABOR Sec. 301. Establishment. Sec. 302. Duties. TITLE IV--JOBS PROGRAM Sec. 401. Establishment of grant program. Sec. 402. Use of funds. Sec. 403. Report. Sec. 404. Advisory committee. Sec. 405. Bureau of Labor Statistics duties. Sec. 406. Additional Workforce Innovation and Opportunity Act funding. Sec. 407. Definitions. TITLE I--IMPOSITION OF TAX ON ARTIFICIAL INTELLIGENCE TOKEN USAGE SEC. 101. IMPOSITION OF TAX ON ARTIFICIAL INTELLIGENCE TOKEN USAGE. (a) Chapter 36 of subtitle D of the Internal Revenue Code of 1986 is amended by adding at the end the following new subchapter: ``Subchapter D--Artificial Intelligence ``Sec. 4491. Excise tax on foundation models. ``SEC. 4491. EXCISE TAX ON FOUNDATION MODELS. ``(a) In General.--There is hereby imposed a tax on each covered person for each taxable year equal to the applicable amount. ``(b) Definitions.--For purposes of this section-- ``(1) Applicable amount.--The term `applicable amount' means the greater of-- ``(A) the product of-- ``(i) the fair market value of the tokens processed by the taxpayer in covered transactions during the taxable year, multiplied by ``(ii) the applicable token percentage, or ``(B) the product of-- ``(i) the sum of-- ``(I) the value of all consideration received by the taxpayer in exchange for artificial intelligence services in covered transactions, plus ``(II) the fair market value of all covered transactions with a related party, multiplied by ``(ii) the applicable transaction percentage. ``(2) Covered transaction.-- ``(A) In general.--The term `covered transaction' means-- ``(i) the provision of use or access to a foundation model to an unrelated party in the course of the trade or business of the taxpayer, or ``(ii) the use of a foundation model by the taxpayer or a sale, license, or exchange of such use or access to a foundation model to a related party if such use enables or results in a reduction in the workforce of the taxpayer or of such related party. ``(B) Exclusion.--Such term does not include any use, sale or license of use, or access to a foundation model for the purpose of research and development by any of the following entities: ``(i) A Federal, State, or local government. ``(ii) An institution of higher education (as such term is used in section 101(a) of the Higher Education Act of 1965). ``(iii) A Federally Funded Research and Development Center (as defined in section 2.101 of title 48, Code of Federal Regulations or any successor regulation thereto). ``(iv) An organization that is described in section 501(c)(3) and is exempt from taxation under section 501(a). ``(3) Applicable token percentage.--The term `applicable token percentage' means-- ``(A) in the case of a taxable year with respect to which the applicable unemployment rate does not exceed 5 percent, 2 percent, ``(B) in the case of a taxable year with respect to which the applicable unemployment rate exceeds 5 percent and does not exceed 7 percent, the sum of-- ``(i) 2 percent, plus ``(ii) the percentage by which such rate exceeds 5 percent, or ``(C) in the case of a taxable year with respect to which the applicable unemployment rate exceeds 7 percent, the sum of-- ``(i) 2 percent, plus ``(ii) twice the percentage by which such rate exceeds 5 percent. ``(4) Applicable transaction percentage.--The term `applicable transaction percentage' means-- ``(A) in the case of a taxable year with respect to which the applicable unemployment rate does not exceed 5 percent, 3 percent, ``(B) in the case of a taxable year with respect to which the applicable unemployment rate exceeds 5 percent and does not exceed 7 percent, the sum of-- ``(i) 3 percent, plus ``(ii) the percentage by which such rate exceeds 5 percent, or ``(C) in the case of a taxable year with respect to which the applicable unemployment rate exceeds 7 percent, the sum of-- ``(i) 3 percent, plus ``(ii) twice the percentage by which such rate exceeds 5 percent. ``(5) Applicable unemployment rate.--The term `applicable unemployment rate' means, with respect to a covered transaction, the U-4 defined measure as published in the monthly Employment Situation release by the Bureau of Labor Statistics for the calendar year for which such measure was highest during the 3 calendar years preceding the year in which such covered transaction occurs, determined without regard to any calendar year which began before the date of the enactment of this section. ``(6) Covered person.--The term `covered person' means a person that-- ``(A) develops a foundation model, sells access to a foundation model, or modifies an existing open-weight foundation model, and ``(B) generates revenue from a covered transaction or uses the foundation model to reduce the workforce of such person. ``(7) Foundation model.--The term `foundation model' means an artificial intelligence model-- ``(A) is trained on broad data, ``(B) generally uses self supervision, ``(C) which is trained-- ``(i) using a quantity of computing power equal to or greater than 10\25\ integer or floating-point operations, or ``(ii) using such quantity of integer or floating-point operations as the Secretary determines necessary to achieve comparable model capability for the calendar year, and ``(D) is applicable across a wide range of contexts. ``(8) Open-weight foundation model.--A foundation model the trained model parameters of which are made publicly available for others to download and use, allowing developers and researchers to run, fine-tune, or adapt the model. ``(9) Artificial intelligence.--The term `artificial intelligence' has the meaning given such term in section 5002 of the National Artificial Intelligence Initiative Act of 2020. ``(10) Token.--The term `token' means a discrete unit of data, such as text, code, image, audio, or video data, that an artificial intelligence model processes, used for the purpose of measuring the volume of model input or output. ``(c) Suspension of Higher Rates.--Upon a determination by the Secretary may, in consultation with the Secretary of Labor, that an unemployment rate in excess of 5 percent occurred by reason of a war, pandemic, or any other massive economic shock unrelated to the use of artificial intelligence, the Secretary may apply paragraphs (3) and (4) of subsection (b) without regard to so much of the unemployment rate as the Secretary determines is the result of such unrelated cause. ``(d) Related Party.--For purposes of this section, a person is a related party to another person if such sons are treated as a single employer under subsection (a) or (b) of section 52 or subsection (m) or (o) of section 414. ``(e) Regulations.--The Secretary shall issue and annually revise such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section, including determining, in consultation Secretary of Commerce, the fair market value of a token for purposes of subsection (b)(1)(A)(i).''. (b) Clerical Amendment.--The table of subchapters for chapter 36 of subtitle D of such Code is amended by inserting after the item relating to subchapter D the following new item: ``subchapter d. artificial intelligence''. (c) Effective Date.--The amendments made by this section shall apply to covered transactions (as defined in section 4491(c) of such Code, as added by this section) which occur after the date which is 1 year after the date of the enactment of this Act. TITLE II--TRUST FUND SEC. 201. ESTABLISHMENT. There is established in the Treasury of the United States a trust fund consisting of such amounts (to be appropriated out of any moneys in the Treasury not otherwise appropriated) equivalent to 100 percent of the taxes imposed by section 4491 of the Internal Revenue Code of 1986 for the fiscal year 2027, and for each fiscal year thereafter. SEC. 202. USE OF FUNDS. Such funds appropriated to the trust fund established under section 201 shall be used to carry out titles III and IV. TITLE III--OFFICE OF JOB CREATION AT DEPARTMENT OF LABOR SEC. 301. ESTABLISHMENT. Not later than 90 days after the date of the enactment of this Act, the Secretary of Labor shall establish a Work Protection Administration (in this Act referred to as the ``WPA'') within the Department of Labor, to be headed by the Director of the Work Protection Administration. SEC. 302. DUTIES. The WPA established under section 301 shall develop and implement a jobs program under title IV to award grants to eligible entities. TITLE IV--JOBS PROGRAM SEC. 401. ESTABLISHMENT OF GRANT PROGRAM. (a) In General.--Subject to the availability of funds in the trust fund established under title II, the Director shall establish a grant program to award funds to eligible entities on a competitive basis to create employment opportunities for individuals under section 402. (b) Criteria for Awarding Grant Funds.-- (1) Priorities.--In awarding grants under this title, the Director shall-- (A) give priority to eligible entities that plan to use such grant funds to create jobs to be filled by permanent and full-time employees; and (B) in the case of eligible entities that plan to use such grant funds for functions typically performed by State governments or units of general local government, give priority to eligible entities that are State governments or units of general local government. (2) Additional criteria.--In awarding grants under this title, the Director shall take into consideration-- (A) any recommendations of the advisory committee established in section 404; and (B) any information, including reports provided pursuant to section 405, from the Bureau of Labor Statistics on the impacts of artificial intelligence on the labor market. (c) Application.--To be eligible to receive a grant under this title, an eligible entity shall submit to the Director an application-- (1) at such time, in such manner, and containing such information as the Director may require; and (2) which shall include such assurances as may be necessary to ensure that such entity has the policies described in subsection (e). (d) Interagency Task Force.--The Director shall establish an interagency task force to assist the Director in reviewing any applications submitted under subsection (c), which shall include Federal agencies selected by the Director. (e) Additional Requirements for Eligible Entities.--To be eligible to receive a grant under this section, an eligible entity shall be required to have each of the following policies with respect to any employee hired using grant funds awarded under this title: (1) Collective bargaining.--A collective bargaining agreement, or written policy, not to prevent employees from exercising the rights guaranteed to employees under section 7 of the National Labor Relations Act (29 U.S.C. 157). (2) Notice requirement.--Policies that require-- (A) the posting and maintenance of notices that contain information regarding the rights of such employees under the National Labor Relations Act (29 U.S.C. 151 et seq.) in any workplace of an eligible entity in which employees described in section 402(c) work; (B) that such employees are provided with notice and information regarding the benefits and pay required for each job created under this Act in section 402(d) at the start of employment; and (C) such eligible entity to recognize the exclusive representative selected by the employees in the case that more than 50 percent of the employees indicate the desire to be represented by such exclusive representative. (3) Local hiring.--Policies that provide a preference for hiring employees in the same metropolitan area as the site of employment, as determined by the eligible entity, consistent with applicable Federal law and subject to rules issued by the Secretary of Labor. (4) Limitation.--An eligible entity that is a tribal government shall not be subject to the requirements of this subsection. SEC. 402. USE OF FUNDS. (a) In General.--Each eligible entity awarded a grant under section 401 shall use such funds to hire employees for jobs for which the primary duties are to be carried out by a natural person and that provide-- (1) the support described in subsection (b); and (2) the benefits described in subsection (d). (b) Use of Funds.--An eligible entity shall use such grant funds to hire employees for jobs that provide job creation and support for any of the following in the geographic area in which such grant recipient is located: (1) Job creation to expand child care and early childhood education programs, including staffing licensed child care facilities, supporting preschool and early learning programs, and providing classroom assistance, after-school programming, before-school programming, family engagement services, developmental screenings, literacy initiatives, and nutrition support for young children. (2) Job creation to support public education programs, including tutoring, mentoring, classroom assistance, special education support, school library services, educational technology assistance, adult literacy instruction, English language learning programs, science, technology, engineering, and mathematics education, career and technical education support, school-based mental health care professionals, and enrichment programs for students of all ages. (3) Job creation to support health initiatives and programs, including support for mental health professionals, health care workers at underserved hospitals and clinics, community health outreach, vaccination campaigns, disease prevention programs, behavioral health support, substance use prevention, public health education, health data collection, emergency preparedness, and assistance to local health departments. (4) Job creation to support elder care and disability support services, including non-medical in-home assistance, companionship services, transportation assistance, meal delivery, respite care, case management support, accessibility improvements, independent living services, and programs that enable older adults and individuals with disabilities to remain safely in their communities. (5) Job creation to support housing construction and rehabilitation, including the construction, rehabilitation, weatherization, accessibility modifications, lead hazard remediation, energy efficiency upgrades for homes. (6) Job creation to support housing-insecure or homeless individuals, including homelessness outreach and supportive housing services. (7) Job creation to support community violence prevention and public safety, including violence interruption initiatives, youth mentoring, neighborhood outreach, victim assistance, crisis intervention support, emergency preparedness education, and other evidence-based public safety programs. (8) Job creation to support scientific research and innovation, including technical support for federally funded research, laboratory operations, environmental monitoring, scientific field work, research data management, technology development, public-interest innovation, and research assistance performed by Federally Funded Research and Development Centers (as such term is defined in section 2.101 of title 48, Code of Federal Regulations, or any successor regulation) or an institution of higher education operated by a State or political subdivision of a State. (9) Job creation to support the construction, repair, maintenance, modernization, and inspection of roads, bridges, rail systems, airports, ports, public buildings, drinking water systems, wastewater facilities, broadband infrastructure, sidewalks, bicycle facilities, parks, and other public infrastructure. (10) Job creation to support the commissioning of public art projects, museum support, archival preservation, library services, digitization of historical records, cultural programming, preservation of historic sites, documentation of local history, and community arts education. (11) Job creation to support strengthening environmental conservation and climate resilience including through habitat restoration, wetland conservation, invasive species removal, urban forestry, watershed protection, coastal restoration, soil conservation, carbon sequestration projects, renewable energy deployment, energy efficiency improvements, and climate adaptation initiatives. (12) Job creation to support wildfire prevention and disaster preparedness programs, including forest management, hazardous fuel reduction, flood mitigation, emergency shelter preparation, disaster planning, emergency logistics, post- disaster debris removal, hazard mapping, community resilience projects, and recovery assistance following federally declared disasters. (13) Job creation to support the repair, remodeling, and beautification of schools, community centers, libraries, and other community-based public facilities, and the increase in the number of workers at such schools, community centers, libraries, and other community-based public facilities. (14) Job creation to support the renovation, enhancement, and maintenance of parks, playgrounds, public and tribal lands, trails, and other public spaces. (15) Job creation to support local news and journalism, including local news funds, local news and community information organizations, journalism fellowship programs, and the maintenance and expansion of local, nonprofit, and public- interest news gathering and reporting capacity. (16) Job creation to support programs and training activities under the Workforce Innovation and Opportunity Act (29 U.S.C. 3101 et seq.). (17) Job creation to support other activities as determined by the Director and the advisory committee established under section 404 to address public needs. (c) Employee of an Eligible Entity.-- (1) In general.--To be eligible to be an employee hired by an eligible entity with grant funds awarded under this title, an individual shall-- (A) be 18 years or older; and (B) subject to paragraph (2), be hired to perform any service for an eligible entity as an employee of such entity. (2) Exceptions.--An individual hired to perform any service for an eligible entity shall not be considered an employee of such entity if-- (A) such individual is free from control and direction in connection with the performance of such service, both under any contract for the performance of such service and in fact; (B) the service performed by such individual is outside the usual course of the business of the entity; or (C) such individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in such service. (d) Job Requirements.--An eligible entity awarded a grant under section 401 shall provide each employee described under subsection (c) hired for the purpose of providing support under subsection (b) with-- (1) a wage of not less than the greater of-- (A) the minimum wage rate as established under section 6 of the Fair Labor Standards Act of 1938 (29 U.S.C. 206); (B) the minimum wage rate as established under applicable State or local law; or (C) the prevailing wage rate paid to workers in the same locality for similar work, as determined by the Secretary of Labor, and not less than the greater of the prevailing wage required under applicable Federal, State, or local prevailing wage statute; (2) coverage under a health insurance benefits plan comparable to the health insurance benefits plan offered to Federal employees under the Federal Employees Health Benefits Program established under chapter 89 of title 5, United States Code; (3) at least 12 workweeks of family and medical leave benefits during any 12-month period under section 102(a) of the Family and Medical Leave Act of 1993 (29 U.S.C. 2612(a)) except that such employee shall be paid at a rate equal to their regular rate of pay for each week of such leave; and (4) the ability to earn 1 hour of paid leave for every 30 hours worked, but not greater than 56 hours of such leave in a year unless such entity chooses to set a higher limit, to be used by such employee for any purpose. (e) Nondisplacement.-- (1) Nondisplacement of existing employees.--An eligible entity may not use grant funds awarded under section 401 to hire an employee that meets the requirements of subsection (c) for a job created under this section if-- (A) employing such employee will result in the layoff or partial displacement of an existing employee of such entity; (B) such employee will assume any of the duties or responsibilities of an existing employee of such entity who is on strike; or (C) such employee will perform work that is the same or substantially similar to the work performed by any existing employee at the same site of employment, and if such existing employee-- (i) has been laid off or partially displaced as a result of such employee hired from grant funds awarded under section 401; and (ii) has not been offered to be restored to the position such existing employee had immediately prior to being laid off or partially displaced. (2) Existing employee defined.--The term ``existing employee'', when used with respect to an eligible entity, means an employee who was an employee of the eligible entity on the date prior to the date an individual was hired using grant funds under this title. SEC. 403. REPORT. Not later than one year after the first grant is awarded under section 401, and annually thereafter, the Director shall submit a report to the Committees on Education and Workforce of the House of Representatives and the Committee on Health, Education, Labor, and Pensions of the Senate, including-- (1) the number of grants awarded under section 401; and (2) data on the jobs created under section 402 as a result of such grants, including-- (A) the number of jobs created for each grant awarded under section 401; and (B) the average and median wage and the wage range paid by eligible entities for such jobs. SEC. 404. ADVISORY COMMITTEE. (a) Establishment.--Not later than 180 days after the date of enactment of this Act, or 90 days after the establishment of the Office under title III, whichever is sooner, the Director shall establish an advisory committee (in this section referred to as the ``Committee'') to advise the Office regarding the grant program established under section 401. (b) Membership.--The Committee shall be composed of the following members: (1) A designee of the Secretary of Labor. (2) A designee of the Secretary of Commerce. (3) A designee of the Secretary of Education. (4) A designee of the Chair of the Federal Reserve. (5) A designee of the Chair of the National Labor Relations Board. (6) One representative from the National Science Foundation. (7) One representative from the Council of Economic Advisors of the Executive Office of the President. (8) One representative from the Office of Science and Technology Policy of the Executive Office of the President. (9) Not less than one representative from any union with two or more branches located in the States or territories of the United States and whose membership exceeds 50,000 members. (10) The governor of each State or their designee. (11) Two economists studying macroeconomic labor trends. (c) Chairperson.--The Chairperson of the Committee shall be designated by the Director. (d) Meetings.--Not later than 30 days after the date of enactment of this Act, and on a quarterly basis thereafter, the Committee shall meet with the Office to advise the Director on the development and implementation of the jobs program under this title. (e) Inapplicability of the Federal Advisory Committee Act.--Chapter 10 of title 5, United States Code (commonly known as the ``Federal Advisory Committee Act''), shall not apply to the Committee. SEC. 405. BUREAU OF LABOR STATISTICS DUTIES. (a) In General.--The Bureau of Labor Statistics shall collect, collate, and report on the impacts of artificial intelligence on the workforce, including impacts beyond-- (1) job displacement as a result of artificial intelligence; and (2) the degradation of existing jobs, including employees receiving lower pay or fewer hours or such jobs becoming temporary as a result of artificial intelligence. (b) Authorization of Appropriations.--There is authorized to be appropriated to the Bureau of Labor Statistics 20 million dollars for each fiscal year beginning fiscal year 2027 and ending fiscal year 2031 to carry out this section. SEC. 406. ADDITIONAL WORKFORCE INNOVATION AND OPPORTUNITY ACT FUNDING. For the fiscal year 2027, and for each fiscal year thereafter, there is authorized to be appropriated not greater than 20 percent of the funds appropriated to the trust fund established under section 201 to fund programs and training activities under the Workforce Innovation and Opportunity Act (29 U.S.C. 3101 et seq.). SEC. 407. DEFINITIONS. In this Act: (1) Artificial intelligence.--The term ``artificial intelligence'' has the meaning given such term in section 5002 of the National Artificial Intelligence Initiative Act of 2020 (15 U.S.C. 9401). (2) Director.--The term ``Director'' means the Director of the Office of Job Creation. (3) Eligible entity.--The term an ``entity eligible'' means-- (A) a State government; (B) a unit of general local government, as defined in section 3 of the Workforce Innovation and Opportunity Act (29 U.S.C. 3102); (C) a tribal government; (D) an elementary school or a secondary school, as defined in section 8101 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7801), that derive their support entirely or primarily from public funds; (E) a local or State educational agency, as defined in section 8101 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 7801); (F) an institution of higher education; or (G) an organization described in section 501(c) of the Internal Revenue Code of 1986 and exempt from taxation under section 501(a) of such Code. (4) Full-time employee.--The term ``full-time employee'' means an employee who is employed, on average, at least 30 hours a week in a calender month. (5) Institution of higher education.--The term ``institution of higher education'' has the meaning given such term in section 101 of the Higher Education Act of 1965 (20 U.S.C. 1001). (6) Partial displacement.--The term ``partial displacement'' means any reduction in hours, wages, or employment benefits of an employee. (7) Permanent employee.--The term ``permanent employee'' means an employee who is not designated as a temporary employee and whose employment does not terminate after 1 year or less after the date on which such employee began work at such job. <all>