Proponents argue the levy fairly channels AI-driven productivity gains back to citizens: as automation concentrates profits and displaces tasks, a universal dividend cushions disruption, reduces poverty, and strengthens workers’ bargaining power without creating benefit cliffs. Because the base is vast and low-friction—machine-to-machine payments, API calls, autonomous purchases—a uniform 5% micro-levy can raise substantial revenue at a modest rate while avoiding loopholes that plague corporate income taxes. UBI’s unconditional nature encourages entrepreneurship and risk-taking, enabling people to retrain, start firms, or provide caregiving without fear of losing means-tested benefits. By guaranteeing a baseline of income, it improves mental and physical health, reduces crime, and stabilizes local demand, making communities more resilient to technological shocks. Tying funding directly to automated activity aligns incentives: those who profit from automation finance the social contract that legitimizes rapid adoption. The result can be faster, less contentious deployment of beneficial AI, with broad-based, politically durable support.

Critics counter that a transaction tax is economically blunt: cascading at each step of automated supply chains, it compounds costs, distorts pricing, invites pass-through to consumers, and risks offshoring automation to lightly regulated jurisdictions. Definitional and enforcement challenges are severe—what counts as an “automated” transaction, how to treat hybrid human-in-the-loop workflows, and how to monitor crypto or cross-border microtransactions without intrusive surveillance—raising compliance costs and evasion opportunities. A uniform rate also ignores margin differences across sectors, penalizing high-volume, low-margin services and throttling innovation in precisely the areas where automation yields consumer surplus. On the spending side, UBI carries macro risks: it can be inflationary in tight labor markets, reduce labor-force participation at the margin, and channel scarce fiscal capacity to the affluent rather than the needy. Revenues tied to transaction volumes are procyclical and volatile, complicating budgeting. Alternative instruments—progressive income taxes, carbon or land value taxes—may fund targeted support with fewer distortions.