In this day and age, companies have to be at the forefront of technological developments within their industry. This often includes replacing human workers with robots to increase productivity. While this helps companies to stay competitive in their respective markets, it is also decreasing the income of the government: income tax. Because right now, when a worker earns a certain amount of money working, he/she has to pay income tax over the earned money. When this worker gets replaced by a robot, the robot does not pay any tax whatsoever.
This will soon change, if it is up to San Francisco Board of Supervisors member Jane Kim. She is pushing to charge companies taxes on the labour that is being done by robots. According to her, this money can then be used to promote and subsidize schooling for jobs that are currently still hard to automate, such as elementary teachers or caretakers for elderly people, where there is a shortage of workers. She says this is needed to battle the increase in the amount of people being unemployed because their job got automated.
On the other side is the president of the Association of Advancing Automation Jeff Bernstein. He states that the hysteria about job losses is nothing new, and that automation is boosting the economy by making companies more competitive. He says he does not want to dis-incentivize innovation at companies. Next to that, he does not think that the unemployment rate increases as automation increases. He says people will keep defining new jobs that we simply do not know of yet, just like 20 years ago nobody knew about a career as app developer for iPhone, which nowadays is a good paying job.
I agree with Jeff Bernstein’s notion about not wanting to dis-incentivize companies to innovate, but I do not think charging robot tax will dis-incentivize companies to innovate. Even if companies for example have to pay the equivalent of the cumulative income tax of the jobs that are replaced, companies will still decrease their costs by innovating and automating. This means there will still be an incentive to do so.
All in all, I do believe it is a good idea to impose robot tax on companies. Companies will still be innovative to increase efficiency and decrease costs, while the government gets the resources to help the replaced workers transition to different professions. However, I think this is something that should be implemented gradually, to slightly -not abruptly- slow down the economic effects of automation. This also allows the government some time to come up with a plan to use their resources as effective as possible, which is Bill gates said is a big challenge (Quartz, 2017). When a robot tax would be imposed abruptly within any country or region, this would hurt the competitiveness of companies within that country/region compared to companies from outside. This is why the European parliament rejected the idea of imposing a robot tax(Reuters, 2017). What do you think about imposing a robot tax? Please let me know in the comments below!
Gillies, T. (2017). San Francisco official pushes for taxes on robots. CNBC. Retrieved 8 October 2017, from https://www.cnbc.com/2017/10/08/san-franciso-official-pushes-for-taxes-on-robots.html
Prodhan, G. (2017). European parliament calls for robot law, rejects robot tax. Reuters. Retrieved 8 October 2017, from
https://www.reuters.com/article/us-europe-robots-lawmaking/european-parliament-calls-for-robot-law-rejects-robot-tax-idUSKBN15V2KM
Delaney, K. J. (2017). The robot that takes your job should pay taxes, says Bill Gates. Quartz Media. Retrieved 8 October 2017, from
The robot that takes your job should pay taxes, says Bill Gates
Hi,
I enjoyed reading your piece, because I believe this matter will become more and more apparent in today’s world. I agree with what Jeff Bernstein said. Over the years, we have seen many technological advances where people were replaced by robotics or other innovations. If we take the simple example of a computer. A computer allows people to execute tasks faster than people, allows us to communicate easier, share work and work together easier, and has thereby replaced many jobs that were previously necessary if it weren’t for the computer. Humanity would be worse of if computers were taxed due to unrealised productivity, convenience, and connectivity with each other. In this sense, Bill Gates contradicts himself because his computers did not pay tax either.
However, I do agree with you in the sense that we should tax robots. Of course, companies will still be innovative, even when they have to pay taxes for robots that replace people’s work. Just as long as the benefits outweigh the costs. But we have always replaced people with machines. The notion that a robot is taking away someone’s job is based on the mindset that humans have to work 8 hours a day. ‘The greater the dividend humanity receives from robots because of their higher productivity, the larger the basic income can be without disrupting the economy’ (Prochazka, 2017). This means that humans should actually be able to work less, which makes the notion that people’s jobs are taken away invalid.
Besides, where would you draw the line if you are going to tax robots? Which robots/machines should be payed tax for? It would even create unfair competition because some companies will have to pay taxes for certain robots, while others don’t because some authority has declared that the respective robots/machines replace people’s work to a certain degree enough to pay taxes for.
But again, this matter will definitely become apparent across countries and we have to think about this carefully, and make sure that we don’t just buy some hype. We have always replaced machines with humans.
T. Prochazka, (2017, February 21). Bill Gates is wrong: Don’t tax robots | Basic Income News. Retrieved October 09, 2017, from http://basicincome.org/news/2017/02/bill-gates-wrong-dont-tax-robots/
Very interesting subject Romulo! While I do agree that the funds that a government loses when employees lose their jobs and that a robot tax could fill this function perfectly, I am more concerned with how it should be implemented. Working people can negotiate a raise or a promotion, which means that the amount of income tax they pay is dynamic. Once you replace these workers with robots, you will lose this dynamic because robots do not negotiate raises and promotions. So even if you equate the robot tax to the income tax of the workers when they get laid off, the government will probably miss the potential income that it could otherwise generate had there been promotion and raise negotiations. Besides that, i also think that some of the revenue that the income tax generates for the government should go towards some welfare program to sustain the people that just lost their jobs in the time that they get retrained. I am very interested in seeing how these issues will be dealt with.