By Daniel J. Pilla
Wednesday, July 15, 2026
For years, socialist advocates of Big Government have
pushed wealth taxes as the next step in redistributing the fruits of one’s
labor and enterprise. Their premise is that government has a superior claim to
the wealth accumulated by successful individuals and businesses, even after the
payment of taxes incurred in the creation and consumption of that wealth.
Whether the target is high-income earners, inherited wealth, or unrealized
capital gains, those advocates’ objective has been to transfer private assets (beyond
mere “income”) into the hands of the state.
Leftist U.S. Senator Bernie Sanders’ proposed American AI Sovereign Wealth Fund Act (introduced in the
Senate on June 19 but yet unnumbered) crosses a line that previous
redistributionist lawmakers didn’t reach. Sanders’ scheme goes beyond simply
taxing wealth. It compels business owners to surrender ownership of the company
itself that creates their wealth.
The distinction matters.
I’ve written before about proposals such as Minnesota’s wealth
tax proposal, which would punish the accumulation of capital by taxing assets
that were built through years of investment, creativity, innovation, and
risk-taking. Those proposals are economically destructive, but at least they
leave ownership of the income-producing assets in private hands.
Sanders’ proposal is fundamentally different. Instead of
merely taxing successful businesses, it would require qualifying artificial intelligence (AI)
companies to transfer half of their ownership interests directly to the
federal government, to be controlled in a so-called “sovereign wealth fund.”
The federal government would become a major owner of private companies, but not
because it invested capital, developed technology, assumed entrepreneurial
risk, or purchased stock in the marketplace. They would become owners because
Congress ordered the transfer.
While the mechanism is labeled as an “excise tax,” the
tax must be paid by transferring company equity in such an amount that
“immediately after the tax has been paid, the [federal government] shall hold
50 percent of all outstanding equity interests” in the company. That’s not
taxation. That’s outright theft by government of private assets carried out
under the socialist concept of compulsory state ownership.
Sanders’ motivation is driven by the same philosophy that
drives all modern socialists: free markets are unfair in that they end up
vesting substantial wealth in the hands of just a few. Sanders’ remarks in the proposed act justifying the theft of private
assets include: “The 8 richest Americans — all AI oligarchs — together have
more than $2.9 trillion in wealth, more than bottom 59 percent of U.S.
households combined.” Beyond that, the “findings” of fact presented in the introduction to the bill
itself declare that artificial intelligence “is a public resource” chiefly
because “a small number of oligarchs have essentially stolen the creative work
of hundreds of millions of people” in order to create it.
To Sanders’ way of thinking, the alleged theft of
intellectual property by AI developers justifies government theft of half the
stock of AI companies. The bill asserts that the wealth generated by AI “must
benefit humanity.”
Sanders portrays his proposal as allowing every American
to “share in the wealth” of the AI revolution. He ignores the fact that every
American already has the right to “share in” such wealth. All one has to do is
buy stock in any AI company that is publicly traded. But the truth is this
proposal is not about providing opportunity to the common citizen. It’s about
the Marxist idea of transferring ownership of private property into the hands
of the state, by force when necessary.
Under the legislation, a government-controlled “sovereign
wealth fund” would receive the value of the transferred ownership interests,
and all Americans would purportedly receive annual dividend payments, estimated
at roughly $1,000 per person. Sanders claims that eventually, “the wealth that
it generates could be used to ensure that every man, woman and child in the
United States has a decent and dignified standard of living, including the
right to health care, education, housing, and a healthy and habitable
environment.”
But the proposal is that just 5 percent of the wealth of
the fund would be used for direct payments to Americans. What would the balance
of the 95 percent be used for? The answer is government-sponsored welfare
programs, including “access to health care, education, and housing.” In other
words, programs that create even more dependence on government.
Who doesn’t want free money from the government? But that
promise ignores the most fundamental principle of free markets: Those who
receive the rewards should also bear the risks. Investors purchase stock with
their own money. Entrepreneurs mortgage their homes, invest their savings,
sometimes go without paychecks, and spend years building businesses that often
fail. They devote their careers to creating products that consumers voluntarily
purchase. Every dollar earned represents risk assumed by someone. The
recipients of these proposed government dividends have assumed none of that
risk. They invested nothing. They sacrificed nothing. They stand to lose
nothing if the enterprise performs poorly. Sanders affirms this very fact,
claiming that “If the value of these companies goes down, as others have
suggested, the companies would bear the losses, not the federal government.”
And there’s the rub. The federal government stands in the
unique position of an uninvested “partner.” It would acquire ownership without
purchasing it. Unlike every legitimate shareholder in the marketplace,
Washington would obtain its interest by legislative fiat entirely without risk.
There is a world of difference between earning ownership
and confiscating it.
Moreover, once the federal government has control of the
income generated by its 50 percent ownership interest, there’s simply no
restriction on what it can do with it. As we know from the long experiment with
the Social Security benefits program, future Congresses can change the law any
way they wish with just 51 percent of the support of sitting legislators and a
willing president. As years pass, future citizens might get a dividend payment,
but they might not.
Perhaps the most troubling aspect of the proposal is its
governance structure. The legislation contemplates an “Independent Commission
for Democratic AI” to manage the public’s interest. The commission would
consist of seven unelected members (nominated by the president and confirmed by
the Senate) selected from a list of candidates provided by Congress. The
commission would exercise voting authority over government-owned shares and
participate directly in corporate governance.
The irony is rich. Sanders is concerned that currently,
just eight individuals in the private sector control substantial amounts of
American wealth. Instead, he would substitute that for seven unelected
bureaucrats and political hacks exercising forced control over the operations
of private businesses. That concept should alarm anyone who values free
enterprise.
Businesses exist to develop products, satisfy customers’
needs, innovate, and earn returns for those who invest their resources.
Government exists to establish reasonable rules to prevent one person or
business from unlawfully converting the income or assets of another through
force or by fraud. Those are entirely different functions. Once political
appointees begin participating in the management of private enterprises,
business decisions inevitably become political decisions. And you can be sure
that depending upon who happens to control Congress and the While House, about
one half of the population will vehemently disagree with those decisions.
History demonstrates that governments are remarkably poor
at efficiently allocating capital. Bureaucrats respond to political pressure,
election cycles, interest groups, and ideological agendas. Entrepreneurs
respond to the wants and needs of consumers. Their free purchasing decisions
(or not) in the marketplace control the success or failure of a particular
business. Government should never be involved in such decisions.
The commission would not be bound by factors that ensure
the best interests of the company’s investors or customers. Rather, the
commission would be “mandated to promote the goals of worker welfare, public
safety, fair competition, environmental sustainability, and financial
solvency.” These politically motivated concepts are entirely undefined.
Moreover, the money in the fund could never be used to provide “financial
assistance to, or for the benefit of” any AI company from whom the wealth is
confiscated. Thus, the proposal is, in every sense of the word, a one-way
street.
Even more concerning is the unique nature of the
companies targeted by this legislation. AI is rapidly becoming one of the
principal means through which Americans obtain information, conduct research,
communicate, and create and operate businesses. Government ownership of
substantial voting interests in these companies raises obvious concerns.
To be clear, the legislation does not expressly authorize
government officials to determine what information Americans may access via the
AI platforms it would partly own. But it is not unreasonable to ask where that
path may lead. If political appointees possess and exercise meaningful
influence over the governance of companies that increasingly shape information,
communications, and technological development, today’s corporate governance
authority could become tomorrow’s influence over product design, content
policies, or access to emerging technologies. It is not a wild leap to suggest
that government’s direct control of boardrooms could turn into direct control
over the nature of the information Americans are allowed to use and consume.
Remember the Disinformation Governance Board, created in 2022 within the
Department of Homeland Security during the Biden administration? Here we go
again!
This is precisely the potential worst-case scenario that
Americans should examine before granting government unprecedented ownership
authority over the nation’s most innovative private enterprises.
This proposal also creates a dangerous precedent that
could extend far beyond artificial intelligence. If Congress can require AI
companies to surrender half their ownership because the industry has become so
“systemically important,” what prevents the next Congress and president from
applying the same reasoning to pharmaceutical companies, energy producers, home
builders, financial institutions, insurance providers, food producers, biotech
firms, or car manufacturers? Aren’t all of these sectors systemically
important? Once compulsory government ownership of private enterprise is
accepted as legitimate, the list of future targets becomes a matter of
political preference rather than constitutional principle.
This is an open, brazen Marxist attack on private
property itself. Private ownership is not merely an economic arrangement. It is
one of the principal safeguards of individual liberty. When citizens own
property independent of government, they possess a measure of independence from
government itself. As government ownership of the means of production expands,
private independence necessarily contracts. The end result is total dependence
on government for one’s daily needs. There is no leverage in changing another’s
opinion or compelling his support greater than that of being the provider of
the daily sustenance that person needs to live.
That is why proposals like Minnesota’s wealth tax are so troubling. They gradually
erode the connection between effort and reward. Sanders’ proposal goes even
further by weakening the connection between ownership and investment. America
did not become the world’s leader in innovation because unelected bureaucrats
directed the activities of private enterprise. It became the world’s leader
because entrepreneurs risked their own fortunes, investors voluntarily supplied
capital, and consumers — not bureaucrats — determined which ideas succeeded.
The American AI Sovereign Wealth Fund Act turns that
formula upside down.
It allows politicians to acquire substantial ownership of
successful companies without risking taxpayer capital in the marketplace. It
allows millions of Americans to receive investment returns from businesses in
which they invested nothing, and for whose failures they bear no financial
responsibility. It places government appointees in positions of influence over
some of the most strategically important technology companies in the world with
no accountability to the marketplace.
