The tax base is a wage base
The wage-based tax state
In most developed economies, personal income tax and payroll tax together provide the majority of government revenue. In the United States these two categories supply around 80 to 85 percent of federal revenue. In the United Kingdom, income tax and national insurance similarly dominate. Modern states are, in effect, wage states.
The implicit assumption
This arrangement is built on the assumption that labour will always be the main engine of economic output. If that assumption holds, taxing wages is straightforward. If it stops holding — if machines do most of the work — then taxing wages is taxing a shrinking pie, and the state runs out of money exactly when its population needs it most.
The alternatives
There are several candidate replacements, each with trade-offs. A value-added tax spreads the load across consumption but is regressive without offsets. A corporate tax captures firm profits but faces tax-base mobility. A wealth tax captures accumulated capital but is hard to measure and administer. A robot or compute tax targets automation directly but can be gamed. None is a silver bullet; all are politically contested.
Why this matters for the risks
A state that cannot tax cannot transfer. A state that cannot transfer cannot cushion a large-scale displacement. The tax-base problem is therefore the engineering problem sitting underneath every policy proposal in the next module. Before you can redistribute, you have to collect.
Roughly what share of your own country's government revenue comes from taxes on wages and salaries? If it fell by half, what would give first?