Aug 28, 2021 - Technology

The case against taxing robots

Illustration of a robot arm holding a bag of money.

Illustration: Aïda Amer/Axios

Taxes targeted at firms that employ robots over human workers would be counterproductive, a new article argues — and no, it wasn't written by a robot.

Why it matters: A growing number of technologists have argued that taxing companies that invest in robots would help reduce inequality and cushion job losses caused by automation, but such a tax could cost more than its worth by slowing economic growth, WSJ's Richard Rubin writes.

How it works: The argument for a robot tax, as stated by figures as disparate as Bill Gates and New York Mayor Bill DeBlasio, is straightforward: Because the wages earned by human workers are taxed while capital investments — including in robotics — can be deducted, wide-scale automation could destroy jobs and tax revenue.

  • Such a tax would disincentivize automation and could be used to support displaced workers.

But, but, but: That's precisely the problem, argues Robert Seamans, the director of NYU's Center for the Future of Management, in a new article for the Brookings Institution.

  • For one thing, Seamans notes, fears of a robo-jobpocalypse are so far unfounded. A report last year by MIT's Task Force on the Future of Work found that AI and automation currently have the same effect on total job numbers as past technological shifts like industrial mechanization.
  • Seamans notes that firms investing the most in robots are experiencing more employment growth than companies that don't, and any tax that slowed that adoption "will likely lead to less economic growth" — which likely means less tax revenue.
  • Lastly, any robot tax would need to define what qualifies as a "robot" and what is just a piece of technology — and that question is far from clear.

The bottom line: Seamans suggests narrowing the gap between how the tax code treats capital and labor more generally, rather than targeting robots specifically, and supporting displaced workers directly.

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