Robot Tax

Bits and Bytes Weekly

March 10, 2017

Bill Gates suggested that companies that use robots should pay a robot tax. His rationale is based on the fact that robots are increasingly replacing humans and it is unlikely that new jobs will be created for displaced workers. Gates believes that government should step in and manage the pace of disruption. The robot tax would support social services for the unemployed and reduce the impact of lower government revenues from personal income tax. The EU had contemplated a similar tax where proceeds would fund training necessary for displaced workers.

Critics argue that a robot tax is essentially a tax on efficiency and companies should not be penalized for becoming more efficient. In addition, lower labor cost would improve profitability for many firms resulting in higher corporate tax paid to government coffers.

Artificial intelligence has the potential to drive workforce automation across both manufacturing and knowledge-based workers. A 2013 University of Oxford study suggested that just under half of all the jobs in the U.S. could feasibly be done by machines within two decades and McKinsey suggested that 27% of global employment costs could be reduced as a result of intelligent automation.

Elon Musk suggested that a universal basic income will become necessary as people’s jobs are increasingly replaced by robots and there will be fewer and fewer jobs that a robot cannot do better. Musk also suggested that automation could lead to unhappiness – “A lot of people derive their meaning from their employment. So if there’s no need for your labour, what’s your meaning? Do you feel useless?”

In the ideal world there would be global coordination to ensure competitiveness, continuing business efficiency growth, and personal dignity. There will of course be bumps in the road that we’ll have to navigate on your behalf. At the Wooding Group we’ll be watching these developments very closely for opportunities and risks.