Robot tax, odd as it sounds, has some logic
Robot tax, odd as it sounds, has some logic
The real question is how to ensure growth is more evenly shared
Reuters
FEBRUARY 21, 2017
Robots can perform surgery, defuse bombs and serve up the perfect flat white. Soon they may need programming to fill out their own tax returns. As anxiety grows over the swaths of jobs susceptible to automation, figures as disparate as Bill Gates, co-founder of Microsoft, and Benoît Hamon, the new champion of the French left, are backing the idea that governments should use the tax system to redress the balance between men and machines.
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It is easy to caricature such proposals — but the underlying arguments are not as crazy as they might at first seem.
A direct tax on robots is not the answer. There is no more basis for that than there is for taxing the use of Excel spreadsheets, or electric toasters, or any other labour-saving device. It makes no sense to penalise technological innovation that raises productivity and creates wealth. Indeed, any rich country that makes automation too expensive risks driving its manufacturers away to lower wage jurisdictions.
However, there are well-founded concerns about the speed with which automation can destroy jobs, leaving workers ill-equipped to adjust, and at the uneven manner in which the gains from higher productivity have been shared in recent years. In almost all rich economies, labour’s share of national income has declined. High-income workers and the owners of capital have been the main beneficiaries.
Mr Gates suggests that some form of direct robot tax could be justified — even if it does deter innovation — in order to slow automation and ensure that policies are in place to support the communities most affected. Given the number of people that would be affected by, for example, rapid take-up of self-driving vehicles, he has a point.
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However, the bigger question is how policymakers can use the tax system to ensure that growth is more evenly shared. This will not be straightforward. Most developed countries rely heavily on income taxation, find it politically difficult to make big changes in wealth taxes and risk losing investors to rival jurisdictions if they tax corporate profits too heavily.
Mr Hamon is at least making a serious attempt to engage with the problem. The small print of his manifesto proposes not a direct robot tax, but to apply the “social charges” employers pay for workers to all “value-added”. This is well worth considering, given the effect high employment taxes have had on France’s labour market.
Whether or not the answers are readily available, there is an urgent need to explore new ideas. The industrial revolutions of the past caused social upheaval — but did not in the long term change the overall level of employment. Over time, they have led to shorter working hours, higher wages and less gruelling labour. Policymakers now need to ensure that the next wave of automation proves as benign.
