AI Tax and Work Protection Act

D Artificial Intelligence

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 1025 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).

Subchapter D. Artificial Intelligence