If robots take our jobs, will they be taxed?

In the wake of Bill Gates’ comments on needing to tax machines that replace workers, contemplates the impact of unemployment and public services in the technological revolution

Image: Pixabay

Tax for robots may be the only way that businesses will be able to ease into the future. Well, if not robots, the machinery that replaces jobs must be taxed. As it becomes more and more efficient for machines to do the work currently done by people, the way the technological revolution is reacted to will be decisive regarding whether it is a society-maker or society-breaker.

Bill Gates, the founder of Microsoft, has raised a view that in order to maintain public services, it will be necessary to tax jobs which become automated. Gates claims that “right now, the human worker who does, say, $50 000 worth of work in a factory, that income is taxed and you get income tax, social security tax, all those things. If a robot comes in to do the same thing, you’d think that we’d tax the robot at a similar level.

“If you can take the labour that used to do the thing automation replaces, and financially and training-wise and fulfillment-wise have that person go off and do these other things, then you’re net ahead. But you can’t just give up that income tax, because that’s part of how you’ve been funding that level of human workers.”

It’s an interesting idea.

In order to maintain the same level of public finance, funding will have to come from somewhere and linking it to the degree of automation occurring seems like a sensible idea. If fewer people are to be receiving incomes then revenues on income tax will be lost. Not only will there be less which governments can spend, but there will also need to be some means of sustaining those driven out of the workforce. Being able to hoist this slack through taxing the machines that replace the job may be necessary.

In effect, it is essentially an application of corporation tax, but heterogeneity would be applied as it would depend on how capital intensive a particular firm was. As a tax, it would disincentivise efforts, but by using it to compensate the losses made from reduced unemployment, it shouldn’t change overall produce made.

What Gates says brings about wider points rather than his justification though.

While creativity and new ways of doing things should be encouraged, to promote businesses there will need to be planning around the direction that it will take the economy. If machines are going to be taking jobs, it will be the owners of capital who make the gains and the owners of labour, workers, who are going to lose out. Ultimately, it’s going to make the rich richer with capitalists having no need whatsoever to work to obtain this.

This isn’t an advocacy for adopting socialism, far from it. Incentives should be aligned to get the most out of the means available, but by nature pushing out the demand for labour, Gates has identified that less so for the state but more so for society it will be important that there is a mechanism to enjoy the gains from automation while dodging the losses on both an aggregate societal level and on an individual human level.

Gates makes a point about one particular element of the future, but more difficult existential questions will need to be made along the same line. At the moment, society is geared around being educated to work and contribute to the economy and that this is a form of self-fulfillment. In a post-work future, there will be no place for this structure. Those who were geared to farm hundreds of years ago became those who worked industrially later on. However, it’s unclear what to do in the meantime

when automation occurs. Beyond personal finance, unemployment can be personally difficult for those affected with clear evidence linking it to depression and family breakdown. As well as being able to financially compensate people, there will need to be action taken to understand how people will be empowered when the future has the full capacity to change work as we understand it.

Even a capitalist can understand that conditions for business won’t be healthy if a society isn’t healthy, just as a business won’t work if no one is able to buy its products. It’s good that Gates has asked this question, because someone must.

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