27 February 2017

Quartz: “Bill Gates: the robot that takes your job should pay taxes”

In a recent interview with Quartz, Gates said that a robot tax could finance jobs taking care of elderly people or working with kids in schools, for which needs are unmet and to which humans are particularly well suited. He argues that governments must oversee such programs rather than relying on businesses, in order to redirect the jobs to help people with lower incomes. The idea is not totally theoretical: EU lawmakers considered a proposal to tax robot owners to pay for training for workers who lose their jobs, though on Feb. 16 the legislators ultimately rejected it.

“You ought to be willing to raise the tax level and even slow down the speed” of automation, Gates argues. That’s because the technology and business cases for replacing humans in a wide range of jobs are arriving simultaneously, and it’s important to be able to manage that displacement. “You cross the threshold of job replacement of certain activities all sort of at once,” Gates says, citing warehouse work and driving as some of the job categories that in the next 20 years will have robots doing them.

Kevin J. Delaney

This sounds like a very good idea in my opinion!

There are existing economic mechanisms to recoup those taxes at least to some extent: if companies replace human with robot labor, they save both the wages paid out to people and the taxes paid for employing them. This means higher profits, but also higher corporate taxes paid out to the state (well, assuming companies don’t hide the extra profits overseas, like many of them have been doing for years).

Why Bill Gates would tax robots

But the problem with this scenario is that is ignores the natural evolution of markets: let’s say there’s no automation tax; one company starts employing robots extensively while another still relies on human employees; if the first one out-competes and eventually drives the second one out of business, the people from the second company end up unemployed and the first company ends up with the profits. It’s what could happen not far from now with Amazon Go stores replacing traditional stores on the American market.

Another aspect that complicates the matter is globalization: if a country introduces robot taxes (let’s say the EU), what’s stopping companies from shifting their production elsewhere, where they can employ robots freely? Granted, the EU in this case will still levy taxes on those products through import taxes and VAT, so that might not be such a big issue. But it’s hard to say without some data and simulations about the results.

No matter which way you go, taxing robots directly or letting the market forces ‘decide’, you need a strong state to oversee the collection of taxes and redistribution of wealth. If the money end up back in the hands of the rich, the capital-owners, and the unemployed are left to fend for themselves, there was not much point in implementing the robot tax in the first place.

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