James Packer reveals ‘very scary’ downside of AI which will leave nobody to pay income tax

James Packer is making a fortune on his AI investments. Yet the billionaire foresees a “very scary” downside scenario for the boom technology of the 21st century which should send a shiver through the Australian mining industry, and the nation’s wealthiest families.

His concern is the knock-on effect AI-induced white-collar jobs losses will have on government taxation collections — leaving treasurers the world over scrambling to find new sources of revenue to backfill budget black holes.

In other words, when AI goes from assisting white-collar workers in their jobs to taking them, who will be left to pay the income tax?

As Mr Packer explained, the taxation red flags he sees on the horizon are due to a likely breach of the so-called Moore’s Law — the guiding principle that the speed and capability of computers can be expected to double every two years on the back of increases in the number of transistors a microchip can contain.

And in a nutshell, he puts that down to the belief that the chief executive of what has become the world’s most valuable company, Nvidia’s Jensen Huang, is simply too clever for contemporary tech conventions.

“I do worry that unlike prior incidents, where technology was, or became, a creator of jobs, this time it will be different,” Mr Packer said.

“Nvidia has broken ‘Moore’s Law’ — but not the way people initially excepted — that being, it would be impossible for chip power to double approximately every 18 months indefinitely into the future.

“My understanding is that Jensen Huang — probably the best CEO in the world — is now saying chip performance/capacity will double every nine months for the foreseeable future.

“If that happens, in six years, chips will be around 250 times more powerful than they are today.

“With Elon Musk saying everybody is going to have their own personal robot in 10 years — how are jobs not going to be lost?”

“I think it’s very scary to wonder in a scenario like that where taxes, as an example, will come from. And how governments will regulate technology that is changing at such a fast rate.”

Mr Packer’s tax warning will no doubt add to the angst of Australia’s mining giants and the wealthy, who fear they will bear the brunt of the tax reforms being considered by Federal Treasurer Jim Chalmers.

It could also mean that AI, and filling the white-collar income tax void it could create, will be the elephant in the room in Parliament House next month at Treasurer Chalmers’ economic reform roundtable.

Mr Packer is hardly a lone voice on the issue.

His warning follows a procession of dire predictions from leading US executives about how AI could cut a swathe through white collar workforces. He predicted Amazon chief executive Andy Jassy would be “the first of many people to talk about job cuts” after Mr Jassy warned Amazon’s corporate workforce would inevitably shrink in the coming years due to the “once-in-a-lifetime” impact of AI technology.

Indeed, Mr Jassy’s comments were mild compared to those of Dario Amodei, the head of AI developer Anthropic, who predicted the AI tools his company and others were developing would send the unemployment rate as high as 20 per cent within five years. Ford chief Jim Farley has painted an even gloomier scenario, warning AI could replace “literally half of all white-collar workers in the US.”

Of course, the 57-year-old billionaire is not the only Packer to sound a warning to Canberra about tax.

Back in 1991, his late father Kerry Packer famously and very publicly chided a parliamentary committee who had dared to question the media mogul on his tax arrangements.

“Now, of course I am minimising my tax,” Kerry Packer retorted.

“And if anybody in this country doesn’t minimise their tax they want their head’s read. Because as a government, I can tell you you’re not spending it that well that we should be donating extra.”