U.S. AI Utilization and Workforce Protection Act: Legislative Outline
I. Introduction
The U.S. AI Utilization and Workforce Protection Act introduces the U.S. AI Utilization Levy, a targeted accountability framework to address the accelerating displacement of qualified U.S. citizen workers by artificial intelligence, machine learning, robotic process automation, and related technologies.
While AI offers substantial productivity gains, its predominant corporate application today is direct labor substitution — replacing qaulified American citizen workers to cut costs rather than augmenting human capability. This creates a strong profit incentive to automate rather than invest in American talent.
The Act establishes transparency through a new NAICS 518219 – “Workforce Auto and AI Substitution Services” (submitted for the 2027 NAICS revision) and enforces accountability via a dual-tier U.S. AI Utilization Levy.
Proceeds are dedicated exclusively to retraining, reskilling, and restoring opportunities for U.S. citizen workers. This two-phase approach — Phase 1: Transparency and Phase 2: Accountability — can begin immediately via Executive Order for the NAICS code, with no Congressional approval required for the data foundation.
II. Definitions
- U.S. Citizen Worker: A U.S. citizen by birth or naturalization employed or seeking employment in the U.S. labor market.
- AI Labor Equivalent: A unit of work or task previously performed by a U.S. citizen worker but now substituted by AI, machine learning, robotic process automation, or related technologies.
- Workforce Auto and AI Substitution: The use of AI systems primarily for labor cost reduction through task or headcount replacement rather than augmentation of human workers.
- Levy: An IRS-administered charge on documented AI-driven cost savings and labor equivalents from workforce substitution.
- Cost Savings: Annual labor cost reductions directly attributable to AI and automation deployment.
- Reversal: Net rehiring or retention of qualified U.S. citizen workers in positions impacted by AI substitution.
- NAICS 518219: The proposed industry classification for “Workforce Auto and AI Substitution Services” that enables nationwide tracking of AI-driven displacement.
III. Two-Phase Framework
Phase 1 – Transparency (NAICS 518219)
Creates the statistical infrastructure to track AI utilization and workforce substitution nationwide.
- Requires zero Congressional approval — implementable immediately via Presidential Executive Order directing OMB and the ECPC.
- Timeline: EO signed → 2027 NAICS adoption → Full industry reporting by 2028.
- Critical foundation: Without this code, accurate measurement and enforcement of the levy are impossible.
Phase 2 – Accountability (Dual Levy Structure)
Uses Phase 1 data to impose a structured IRS-administered levy on documented AI labor equivalents and cost savings.
Levy Rate Structure (per year of deployment):
- Small-scale (< 100 AI labor equivalents or <$5 million annual cost savings): 8% of documented cost savings (Years 1–3).
- Large-scale (≥ 100 AI labor equivalents or ≥$5 million annual cost savings): 12% (Year 1), 18% (Year 2), 25% (Year 3).
Strong Incentives for Reversal:
- Dollar-for-dollar tax credits up to 70% of levy owed for net rehiring or retention of qualified U.S. citizen workers.
- Additional 60% levy reduction for companies achieving at least 50% reversal of displaced positions.
- Incentives reserved exclusively for companies that actively prioritize and restore qualified U.S. citizen employment.
IV. Revenue Allocation
Levy proceeds will be dedicated exclusively to supporting qualified U.S. citizen workers impacted by AI:
- Workforce retraining, apprenticeships, certifications, and reskilling programs.
- Temporary financial assistance and job placement services for displaced U.S. citizens.
- Tax credits and grants for companies that prioritize qualified citizen hiring in AI-affected roles.
- Economic development projects in communities hit by AI-driven displacement.
All revenue is reinvested in citizen training and hiring incentives — with no new taxes on U.S. citizens.
V. National Security and Economic Benefits
The Act closes the AI substitution data black hole, enabling better oversight of automation in critical industries and sensitive roles. By strengthening the American citizen workforce through targeted upskilling, it reduces vulnerabilities from over-reliance on automation-driven labor reduction and enhances long-term economic competitiveness.
VI. Enforcement Mechanisms
- Annual IRS audits using NAICS 518219 reporting data.
- Cross-verification with corporate financials and employment records.
- Penalties for non-reporting or under-reporting of AI substitution activity.
- Public transparency of aggregate industry-level displacement statistics.
VII. Addressing Concerns
- Fairness: The levy targets only documented cost savings from labor substitution, not general AI productivity gains. Companies that augment rather than replace citizen workers face minimal impact.
- Implementation: Phase 1 requires only an Executive Order; Phase 2 is straightforward IRS administration using existing tax infrastructure.
- Transition Support: Strong incentives and revenue-funded programs ease corporate shifts toward citizen-first AI adoption.
VIII. Public Awareness Campaign
Educate policymakers, businesses, and the public on the scale of AI-driven displacement (projected ~5.5 million AI & Auto labor equivalents in 2026) and the benefits of citizen-focused AI through clear charts and data.
IX. Call to Action
President Trump can deliver immediate transparency with one signature: an Executive Order mandating the adoption of NAICS 518219 – Workforce Auto and AI Substitution Services.
Congress must then pass the U.S. AI Utilization and Workforce Protection Act to implement the levy and restore opportunities for American workers. This ensures AI works for — not against — U.S. citizen workers.
Let’s OnShore America.
X. Conclusion
The U.S. AI Utilization and Workforce Protection Act, anchored by NAICS 518219, brings transparency and accountability to AI-driven workforce substitution.
Its dual levy structure with powerful citizen-rehiring incentives promotes responsible AI adoption while generating substantial revenue to rebuild American workforce capabilities.