WASHINGTON, July 14 — The debate over taxing America’s booming artificial intelligence industry is drawing on a playbook nearly a century old. As lawmakers eye the sector’s explosive growth, the ghost of Franklin D. Roosevelt’s New Deal is suddenly a talking point in the corridors of power.
The Revenue Act of 1935, a signature piece of Roosevelt’s Depression-era response, pushed the top marginal income tax rate to 79% and introduced an excess profits tax on corporations. By 1945, at the height of World War II, the top corporate tax rate had climbed to 52%.
Those numbers are now being cited by proponents of a new tax on AI companies, who argue that the federal government has both historical precedent and a modern revenue need. The comparisons are not casual. Global AI spending is expected to reach $500 billion by 2024, according to research firm IDC, a figure that has drawn direct parallels to the tech boom of the late 1990s.
That era saw the dot-com bubble peak in March 2000 before a spectacular crash. Skeptics warn that taxing the industry too heavily could stifle innovation or drive companies offshore.
Supporters counter that the current tax environment is historically generous to corporations. The Tax Cuts and Jobs Act of 2017, signed by President Donald Trump, slashed the corporate tax rate from 35% to 21%. That reduction has reshaped federal revenues.
Data from the Congressional Budget Office shows that federal corporate tax revenues as a percentage of GDP have fallen sharply over the long arc of American history — from 4.5% in 1952 to 1.5% in 2020. On the ground in Washington, the math is stark. Corporate tax revenues as a share of the economy have shrunk by two-thirds since the mid-20th century, even as the economy itself has grown enormously.
The AI industry, with its vast data centers, hardware supply chains and software platforms, represents one of the few remaining pools of untapped taxable wealth. The scene on Capitol Hill is one of cautious maneuvering.
No formal bill has been introduced, but the historical precedent of the New Deal — a period when the government actively seized wealth from specific industries to fund national recovery — is being studied closely by both parties. The excess profits tax of 1935 targeted corporations deemed to be profiteering during the Depression, a concept some lawmakers now argue could apply to AI firms riding a wave of unprecedented investment. By nightfall, analysts expect the debate to intensify.
The AI industry’s rapid growth, the historical data on corporate tax revenues, and the lingering effects of the 2017 tax cuts have created a policy moment that feels, to many veterans of the tax wars, like a replay of the 1930s — with a 21st-century twist.
