Taxing Robots: For and Against

robot tax

Close-up Of Robot Examining Financial Report With Calculator On Desk

A number of experts, including Bill Gates, have spoken in favor of taxing robots. Now the Brookings Institution has spoken out against it.

“Robot taxes are a misguided idea that would have negative consequences for firms, their workers, and ultimately the economy,” says author Robert Seamans.

Is it about job losses?

Seamans begins by listing the reasons people have argued in favor of taking robots:

  • Such taxes would provide funding for recompense or retraining of human workers who lose their jobs to robots.
  • The existence of a tax on robots that replace human workers would discourage companies from replacing human workers in the first place.

Seamans questions whether robots are actually replacing human workers or not. But he also questions whether taxation on robots would benefit either workers or the economy. It might just slow down automation and innovation, and hence productivity and profits.

He references research suggesting that companies that automate do better financially — and are therefore able to hire more workers, compared with companies that hold back on automation. Seamans thinks robot subsidies might make more sense than robot taxes.

What about the workers?

One of the arguments in favor of taxing robots is that the additional production and profit associated with robots benefits the machines’ owners, not the workers. Factory owners might choose to invest in more workers and provide more jobs for their communities.

But they don’t always. In fact, some studies have found that a single robot added to a workforce can cut six jobs in the community. Displaced workers may then move to other jobs, and displace other human workers. The effect, those researchers concluded, could be significant.

Other research finds variable results. That is, owners may choose to invest in more human capital, but they may not. They may invest in more robots, or buy themselves a yacht. It’s one of the issues in economics: human beings with free will are involved.

But taxes are intended to influence human decision making. Maybe subsidies for retraining human workers would have more benefits than subsidies for automation. Maybe human workers should get bonuses for increased productivity.

One thing is certain: it’s time to decide whether the savings for companies that replace human workers with robots should just be a happy result for the business owners, or whether some mechanism ought to be in place that would encourage owners to share the wealth. The longer automation benefits  employers and threatens jobs, the more difficult it will be to change that dynamic.

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