American A.I. Sovereign Wealth Fund Act
- Sponsor
- Sen. Sanders, Bernard [I-VT]
- Committees
- Finance Committee (primary)
- Last action
- Jun 18, 2026
Bottom line
This bill aims to capture a significant portion of wealth generated by large AI companies for public benefit through an equity excise tax and a sovereign wealth fund, while also mandating structural separation.
What it actually does
This bill establishes an excise tax on "systemically important AI companies" by requiring them to remit 50% of their outstanding equity interests to the U.S. Treasury. These equity interests will form the "American A.I. Sovereign Wealth Fund," managed by an Independent Commission for Democratic AI. The fund's income will be used for direct payments to Americans and to ensure a decent standard of living. It also mandates structural separation for these AI companies.
Proponents argue
Proponents argue that AI's economic value is derived from humanity's collective intelligence, and therefore, the public should share in the wealth it generates. They believe this fund will ensure equitable distribution of AI-derived wealth, provide a public stake in AI development, and address potential unemployment caused by AI, citing existing sovereign wealth funds and support from industry leaders.
Opponents contend
Opponents would likely argue that such a significant equity seizure constitutes an expropriation of private property, would stifle innovation and investment in the critical AI sector, and could drive AI companies to relocate outside the U.S. They might also raise concerns about government control over private enterprises and the potential for political interference in the management of the fund and the companies.
The bill is moderately complex due to its tax and corporate structure provisions, requiring careful reading. The time given for review is adequate for initial understanding.
Section 1
Short Title - "American A.I. Sovereign Wealth Fund Act"
This section formally names the bill as the "American A.I. Sovereign Wealth Fund Act," establishing its common reference and indicating its primary focus on creating a public fund from AI-generated wealth.
Supporters argue
Supporters would argue that a clear and descriptive short title helps communicate the bill's purpose to the public and stakeholders.
Critics contend
No specific opposition is typically raised against a short title itself.
Tradeoffs
None inherent in a short title.
Section 2
Congressional Findings on AI as a Public Resource
This section outlines Congress's rationale for the bill, asserting that artificial intelligence derives its value from humanity's collective intelligence, making it a public resource. It claims that a few oligarchs have unfairly appropriated this collective work and that the wealth generated by AI should benefit all humanity, citing existing sovereign wealth funds and support from AI industry leaders for such a fund.
Section 3(a), adding Chapter 50B, Section 5000E to the IRC.
Imposition of Excise Tax on Applicable AI Companies
This provision imposes an excise tax on "applicable AI companies" (those with over $200 million in gross receipts from AI activities). The tax requires these companies to remit newly issued equity interests such that the Secretary of the Treasury holds 50% of all outstanding equity. An additional tax is imposed on subsequent equity issuances. Special rules apply for companies undergoing structural separation.
Section 3(a), new IRC Sec. 5000E(c) and (d)
Defining Taxable AI Entities and Activities
This section defines "applicable AI company" as a corporation or partnership engaged in "applicable AI trades or businesses" with over $200 million in gross receipts from those activities. "Applicable AI trade or business" includes activities related to AI data centers, AI computing infrastructure, AI services (defined by computing power > 10^25 operations), and advanced robotics. These definitions are crucial for determining which entities are subject to the excise tax.
Section 3(b)(1), adding new IRC Sec. 9512.
Establishment and Management of the American A.I. Sovereign Wealth Fund
This provision establishes the American A.I. Sovereign Wealth Fund in the Treasury, consisting of the equity interests collected via the excise tax and any income from them. The Fund's assets are to be managed by the Independent Commission for Democratic AI. Annually, 5% of the Fund's average market value (minus administrative costs) is authorized for appropriation, to be used for direct payments to Americans and to ensure a decent standard of living, without requiring the sale of equity interests. No funds can be used for bailouts.
Section 3(b)(2)
Creation and Governance of the Independent Commission for Democratic AI
This section establishes a 7-member Independent Commission for Democratic AI within the Treasury, appointed by the President with Senate consent, with specific representation requirements (e.g., labor, public pension management, AI development, privacy, national security). Commissioners have strict financial interest prohibitions and post-service employment restrictions. The Commission is tasked with managing the Fund's assets, exercising voting rights, and designating representatives to AI company boards to promote worker welfare, public safety, fair competition, environmental sustainability, and financial solvency. It explicitly states these representatives' fiduciary duties align with these goals, even if they conflict with the financial interests of the company or its other equity holders.
Section 3(c), adding new IRC Sec. 6050BB.
Reporting Requirements for Purchases from AI Businesses
This provision requires any person engaged in a trade or business who purchases over $200,000 (the Section 448(c)(1) amount) worth of AI data centers, AI computing infrastructure, AI services, or advanced robotics in a taxable year to report these purchases to the Secretary of the Treasury. They must also furnish a statement to the AI business from which the purchases were made.
Section 3(d) and (e), amending IRC Sec. 6662 and 6651.
Enhanced Penalties for Excise Tax Underpayment and Failure to File
This section introduces severe penalties for non-compliance with the AI excise tax. For underpayment, an additional tax is imposed equal to the difference between 60% (instead of 50%) of outstanding equity and the amount remitted. For failure to file a return, a flat penalty of $1,000,000 is added.
Section 3(f), amending IRC Sec. 7874.
Anti-Inversion Rules for Applicable AI Companies
This provision expands anti-inversion rules to specifically target "inverted applicable AI companies." A foreign corporation is treated as a domestic corporation (and thus subject to U.S. tax law, including the excise tax) if it acquires a domestic applicable AI company and, after the acquisition, more than 50% of its stock is held by former shareholders/partners of the domestic AI company, or if its management and control are primarily in the U.S. and it has significant domestic business activities. Exceptions apply for substantial business activities in the foreign country.
Section 4
Mandated Structural Separation for Applicable AI Companies
This section requires the Federal Trade Commission (FTC) to mandate structural separation for all "applicable AI companies." This means such companies cannot conduct any non-AI business, cannot hold equity or provide financing to non-AI businesses, cannot be held by non-AI entities, cannot share officers or directors with non-AI entities, and cannot participate in joint ventures with non-AI entities. Existing companies must complete separation within 90 days of enactment, and new companies within 90 days of meeting the definition.
Defines "AI services" as the development, distribution, or sale of an artificial intelligence model trained using computing power greater than or equal to 10^25 integer or floating-point operations.
Section 3(a), new IRC Sec. 5000E(d)(3)(A)
Why it matters:This is standard legislative practice for technical definitions, but its specificity makes it easy for a casual reader to overlook its profound impact on which AI models are covered.
Case for: Proponents would argue this provides a clear, objective, and technologically relevant threshold for identifying advanced AI models that warrant inclusion under the tax.
Case against: Opponents might argue that such a specific numerical threshold could quickly become outdated due to rapid technological advancements, or that it might be difficult for companies to accurately measure and report, leading to compliance challenges.
Estimated impact: Directly determines which AI models and, by extension, which companies, are subject to the excise tax and structural separation.
States that representatives designated by the Independent Commission for Democratic AI to serve on the boards of applicable AI companies shall have fiduciary duties that align with advancing worker welfare, public safety, fair competition, environmental sustainability, and financial solvency, even if doing so conflicts with the financial interests of the company or its other equity holders.
Section 3(b)(2)(B)(ii)(III)
Why it matters:This is a highly consequential policy choice that fundamentally alters corporate governance for affected companies, and its placement might obscure its radical nature from a casual reader.
Case for: Proponents argue this ensures that AI companies, now partially publicly owned, operate in the broader public interest, not just for shareholder profit, addressing societal concerns beyond financial returns.
Case against: Opponents would argue this provision fundamentally undermines traditional corporate law and fiduciary duties, creating an unworkable conflict of interest for board members and potentially paralyzing corporate decision-making, leading to inefficiency and reduced competitiveness.
Estimated impact: Transforms the governance structure and strategic priorities of major AI companies, potentially shifting focus from profit maximization to broader social objectives.
The amendments made by the Act take effect 90 days after enactment. Existing applicable AI companies must complete structural separation within 90 days of enactment.
Section 3(h) and Section 4(b)
Why it matters:While effective dates are common, a 90-day window for such a transformative tax and mandatory corporate restructuring is extremely aggressive, making this a highly significant detail that could be missed.
Case for: Proponents would argue that a rapid implementation is necessary to quickly capture AI-derived wealth for public benefit and to address the urgency of potential AI-related societal impacts.
Case against: Opponents would contend that a 90-day timeframe for such complex tax and corporate restructuring requirements is wholly unrealistic, creating immense compliance burdens, legal challenges, and potentially forcing companies into hasty, suboptimal decisions or non-compliance.
Estimated impact: Creates immense pressure and potential chaos for affected companies, likely leading to significant legal and operational challenges in the immediate aftermath of enactment.