Citrini Research warns AI job disruption could trigger 5% white-collar cuts, calls for windfall tax

Citrini Report Author Calls for AI Tax After Scare-Trade Selloff

Governments should consider taxing artificial intelligence to cushion the effects of sweeping job losses, according to Alap Shah, co-author of a Citrini Research report that warned about tech disruption and fueled an AI scare trade. The smarter AI gets, the more jobs it can replace, Shah, chief investment officer at Lotus Technology Management, said in a Bloomberg TV interview. A related hit to consumer spending would imperil the economy, he said, adding that governments should consider policies such as taxing incremental or windfall gains from AI. Shah sees chipmakers, data centers and foundation labs as main beneficiaries of the AI trade. At risk are intermediation businesses like insurers and banks. His firm had short positions in some of the companies cited in the report, he said, while owning "a lot" of semiconductor stocks poised to benefit. The AI "scare trade" rippled through markets on Monday after a weekend report from little-known Citrini Research warned about the technology's disruptive impact on the global economy. The note, which laid out hypothetical scenarios set in the future, highlighted food delivery and credit card companies as vulnerable -- spurring a selloff in delivery, payments and software stocks. The S&P 500 fell 1% while an exchange-traded fund focused on software tumbled 4.8%, bringing its drop from a peak in September to around 35% on concerns AI could cannibalize earnings. International Business Machines Corp. saw its worst drop in 25 years. Shah said he was surprised by the market reaction. "I thought there was going to be a small reaction -- it was definitely larger than we expected." The debate comes amid growing uncertainty over AI's impact on the labor market. While some fear mass-layoffs, others points to prior technological advances that have spawned new industries and jobs. Shah estimates AI could cut white-collar employment by 5% over the next 18 months. Over the next five years, these jobs in the US will be a key gauge of AI's effects, with the impact likely to show up fastest there given its dynamic labor market, he said. "It's much easier to fire folks than it is in other parts of the world," Shah added. In the near term, he expects further market swings, including in software companies, as traders assess the long-term impact from AI. "We are entering a really highly volatile time in the markets," he said.

Citrini Research flags AI 'ghost GDP' risk, calls for taxing windfall gains amid job disruption

Speaking to Bloomberg, co-author Alap Shah, chief investment officer at Lotus Technology Management, said governments should consider taxing incremental or windfall gains from AI to offset job losses triggered by automation. Artificial intelligence could inflate headline economic growth while masking deep labour disruption, according to a new report by Citrini Research. Speaking to Bloomberg, co-author Alap Shah, chief investment officer at Lotus Technology Management, said governments should consider taxing incremental or windfall gains from AI to offset job losses triggered by automation. The core warning from the research firm is a potential "ghost GDP" scenario where AI boosts productivity and corporate profits, lifting output on paper, even as wage growth and employment weaken beneath the surface. The report argues that without policy intervention, gains could accrue disproportionately to capital, widening inequality and straining fiscal systems. Shah added that the market reaction to the report was "definitely larger than we expected," underscoring investor sensitivity to second-order AI effects. Unlike earlier AI tools that augmented productivity, agentic systems can autonomously handle workflows across coding, legal documentation, research, customer service and even financial analysis. That shift, Shah argues, could compress labour demand across white-collar sectors far faster than markets currently anticipate. Shah suggested governments may eventually need to tax incremental or windfall gains from AI to cushion labour displacement. Agentic AI could be the biggest productivity unlock in decades but also the fastest labour substitution cycle in modern economic history.