AI advancements can function as an 'invisible' tax cut; here's how
AI disruption fear: In contrast to popular beliefs about the effects of AI, the letter says the whole economy stands to benefit from AI-led transition.
- Feb 27, 2026,
- Updated Feb 27, 2026 11:25 AM IST
The ongoing volatility and fear in the global markets (especially the IT stocks) has wrecked market investor sentiment as AI threatens to unsettle the job market across the globe. Anthropic is disrupting the world through Claude, with Fortune 500 companies shedding hundreds of billions of market cap subsequently.
The Kobeissi Letter, a US-based financial analysis publication in its article says, "Markets try to price real time margin compression. When AI replicates what workers do, pricing power shifts to the buyer. That is the first-order impact, and it is very real."
Indicating the flip side of the AI-led disruption fears, the publication says, "There is no question that some legacy workflows will experience compression of margins. The question is, do lower cognitive costs collapse the economy or do they allow it to expand dramatically?"
Counting the benefits of AI, The Kobeissi Letter says, "AI decreases costs in every sector and when service costs go down, purchasing power increases with or without wage growth. The doom loop becomes dominant only if AI replaces labor without materially expanding demand. The optimistic scenario emerges if cheaper compute and productivity yields entirely new categories of consumption and economic activity."
In contrast to popular beliefs about the effects of AI, the letter says the whole economy stands to benefit from AI-led transition.
"If the cost of running a business falls, small businesses become more attainable and if the cost of accessing services falls, more households participate. In a way, AI advancements can function as an 'invisible' tax cut. The companies whose margins depend on high-cost cognitive labour may suffer, but the broader economy benefits from lower service inflation and higher real purchasing power," according to the post.
The ongoing volatility and fear in the global markets (especially the IT stocks) has wrecked market investor sentiment as AI threatens to unsettle the job market across the globe. Anthropic is disrupting the world through Claude, with Fortune 500 companies shedding hundreds of billions of market cap subsequently.
The Kobeissi Letter, a US-based financial analysis publication in its article says, "Markets try to price real time margin compression. When AI replicates what workers do, pricing power shifts to the buyer. That is the first-order impact, and it is very real."
Indicating the flip side of the AI-led disruption fears, the publication says, "There is no question that some legacy workflows will experience compression of margins. The question is, do lower cognitive costs collapse the economy or do they allow it to expand dramatically?"
Counting the benefits of AI, The Kobeissi Letter says, "AI decreases costs in every sector and when service costs go down, purchasing power increases with or without wage growth. The doom loop becomes dominant only if AI replaces labor without materially expanding demand. The optimistic scenario emerges if cheaper compute and productivity yields entirely new categories of consumption and economic activity."
In contrast to popular beliefs about the effects of AI, the letter says the whole economy stands to benefit from AI-led transition.
"If the cost of running a business falls, small businesses become more attainable and if the cost of accessing services falls, more households participate. In a way, AI advancements can function as an 'invisible' tax cut. The companies whose margins depend on high-cost cognitive labour may suffer, but the broader economy benefits from lower service inflation and higher real purchasing power," according to the post.