I’ve said for years that HR sits at the intersection of work, power, politics, and money.
We defined work as something a person does in exchange for cash. Power was what bosses and leaders had over people. Politics were something only partisan hacks cared about. And money was measured in dollars.
All that has changed.
- Work is increasingly done by agents, AI software that handles tasks on its own, and billed in tokens, the unit AI companies use to measure that work.
- Power still sits with bosses and leaders, but it’s shifting to the dominant AI companies, which now shape everything from culture to work to politics.
- Money is flowing to those same companies and away from everyone else: you, me, local businesses, cities, states, and the federal government.
How did it get this way? We let it. But past is not prologue. Every day we wake up is a new opportunity to redesign life more thoughtfully. But first, we have some learning to do.
The Problem With Agents
Life, including the basic services you get from government, runs on your paycheck. When a company swaps a person for an agent, it’s a payroll-tax-free labor event, with no benefits and no payroll taxes. The company wins. The state loses the income tax that person paid.
I live in Raleigh, NC, a hub for pharmaceuticals, biotech, and even beer. North Carolina’s General Fund comes to about $35 billion this year. Just under half comes from personal income tax, and most of that is withholding, the money that leaves your check before you see it. Your state is probably not that much different from mine.
My state’s nonpartisan forecasters have already flagged AI as a risk. CEOs keep promising that AI will create new jobs, but the bean counters at the state capitol worry anyway. An agent doesn’t file a return in April. And broke people don’t buy things, so sales tax falls too.
Meanwhile, North Carolina keeps cutting its income tax to attract talent, and the top rate is headed to 2.99% by 2028. So the rate shrinks on purpose while agents shrink the base by accident.
If you think government should spend less and be more efficient, you’re right. But NC teacher pay is already low. Who decides which classroom gets cut? What roads don’t get repaired? How much garbage are we willing to let pile up in our streets? Which 911 call do we ignore?
Washington is messy and gets a lot of attention, but you’ll see the chaos and riots in your local streets before any elderly Senator in DC notices. Yes, the Social Security retirement fund runs short in 2032 without any help from AI. But Washington can borrow through a bad decade. Nearly every state has to balance its budget, so a revenue drop means cuts or tax hikes.
So what do you tax instead?
Agents don’t pay withholding, and states run on withholding. The rate is falling on purpose and the base is shrinking by accident.
The IMF says to tax capital. But in California, a proposed wealth tax has already pushed some billionaires out of the state. So, in the age of AI, what do you tax? The agent? You can’t (at least not yet) because it isn’t a person. The tokens? The savings your CFO is bragging about? Who calculates that tax bill, and is HR in the room when they do?
I don’t know the answers to any of this, but I know Congress (and your local city council) isn’t ready for this conversation either. That’s the next piece.