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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.

Go deeper

Gov. Hutchison to call special session for tax cuts

Gov. Asa Hutchinson announces a special session. Photo courtesy of state of Arkansas

Gov. Asa Hutchinson will call a special session for Dec. 7 primarily focused on a tax reduction bill, he announced Tuesday during a news conference.

Why it matters: The bill, if passed, would reduce the top individual income tax rate from 5.9% to 4.9%, and the top corporate income tax rate from 5.9% to 5.3%. The move would reduce state general revenue by $135.25 million in fiscal 2022, which started July 1, according to the Arkansas Democrat-Gazette.

1 hour ago - World

Pentagon: 8,500 troops on high alert for possible deployment to eastern Europe

Photo: Anna Moneymaker/Getty Images

Defense Secretary Lloyd Austin has placed 8,500 U.S. troops on "heightened preparedness to deploy" to eastern Europe in case NATO activates its rapid-response force over tensions with Russia, the Pentagon announced Monday.

Why it matters: No decisions have been made to actually deploy U.S. forces, but the heightened alert level will allow the military to rapidly shore up NATO's eastern flank in the event that Russia invades Ukraine. The Pentagon warned that Russia has shown "no signs of de-escalating," and continues to amass troops on Ukraine's borders.

Updated 2 hours ago - Economy & Business

S&P 500 on track for worst-ever start to year

Data: FactSet; Chart: Axios Visuals

Stocks suffered their steepest drop of the year early Monday, putting the S&P 500 on course for its worst-ever start to a year.

Driving the news: The benchmark S&P 500 dropped for its fifth straight day, with losses nearing 3% in early trading, momentarily putting it on track to fall into a "correction." Some of the steepest losses were recovered in early afternoon trading.