Should Robots Pay Taxes?

If a robot takes a person’s job, should that robot pay income taxes? It is a question that is increasingly being debated in relation to the impact of automation on employment, and many have suggested that such a tax could help to address inequality and alleviate the social and economic pressures wrought by the shift towards the automation of labor. But experts agree that there is not a clear-cut answer.

As reliance on automation and smart technologies continues to grow, reliance on automated labor will only increase. A widely cited study conducted by economists David Autor and David Dorn found that as computers increasingly substitute low-skill workers performing routine tasks, such as basic accounting and book-keeping, clerical work, and certain kinds of repetitive production, it will lead to a kind of ‘hollowing out’ of the middle class, with employment opportunities increasingly concentrated at the low and high-skill ends of the spectrum. In a 2015 study, Oxford researchers Carl Frey and Mike Osborne actually found that 47 percent of jobs categories in the US are vulnerable to the effects of automation.

The problem is that if large swaths of people are left unemployed as the world gradually becomes more reliant on automation, it will erode countries’ tax bases. Without income tax revenue, it will become increasingly challenging for countries to balance their budgets while still provisioning key public goods like healthcare and education. That’s why some—including American business magnate and investor Bill Gates—have been pushing the idea that robots should indeed pay taxes.

“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,” Bill Gates said in a recent interview with Quartz. “You can’t just give up that income tax. Some of it can come on the profits that are generated by the labor-saving efficiency there. Some of it can come directly from some type of robot tax.”

Gates went on to suggest that the money collected from this kind of taxation should be appropriated to communities whose workforces have been hit hardest by automation in order to fund labor force retraining, among other things.

However, while the proposal of taxing a robot is certainly an intriguing one, it does present a number of challenges. First of all, it has been pointed out that the definition of what constitutes a robot isn’t exactly straightforward.

“There are enormous problems in operationalizing the idea of a robot tax,” Jim Stanford, economist and director of the Centre for Future Work, told the Guardian. “There are endless possibilities for evading and gaming that kind of system; for example, by incorporating the ‘robot’, however that is defined, into other kinds of capital equipment.”

So, are we likely to see a robot tax in the future? Well, the answer, for now, is probably not anytime soon. In order for such a tax to materialize, there would need to be a clear framework put in place to resolve uncertainties, something which would only emerge from cohesive and sustained government engagement around the issue—and for now, that looks to be a long way off.

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