Senator Wyden (D-Ore.) proposed limiting tax benefits for new data centers and levying a new excise tax to help communities and workers impacted by data center construction. The debate over taxing AI has jumped to "which tax?" before answering what lawmakers are trying to accomplish and what a tax can actually do. A specific tax on AI would likely do far less than supporters hope, and the danger lawmakers focus on, widespread job loss, is less certain than the nation's perilous fiscal path. Shoring up the taxation of capital income would likely be more effective than a new tax singling out AI. A new National Bureau of Economic Research working paper from economists Karen Dynan, Douglas Elmendorf, and Louise Sheiner examines how AI could affect the U.S. fiscal trajectory. In every scenario, AI improves the budget outlook, trimming projected federal debt by 39 to 49 percentage points of gross domestic product (GDP) three decades from now. But even those reductions would leave federal debt rising sharply: the Congressional Budget Office currently projects federal debt will climb from 101% of GDP today to 175% by 2056. Even the paper's most optimistic AI scenario would leave debt near 126% of GDP, higher than at any point in American history. In every scenario, federal debt would continue to rise significantly relative to GDP. The deepest debt reduction comes not when AI's gains are broadly shared, but when AI costs workers their jobs and sends gains to the top.