Bill Gates has suggested that taxing robots might be a means of providing people with an income when AI has displaced humans in performing many tasks. Whilst this has a number of attractions and addresses several contemporary tax issues, there are also several problems of implementation and there may be more practical means of achieving this goal.
The prospect of robots taking over many tasks currently performed by humans evokes conflicting emotions. Whilst most of the tasks which robots currently perform are monotonous and repetitive, these have provided many workers a stable income for over 200 years since the Industrial Revolution and the thought of these being taken over by robots can be seen as a threat. However, new jobs may be created in other areas, such as support and development, but it is certain that the skills required will be different and this might be threatening particularly to those workers who perform less skilled tasks. Even though Owen1 argues that the University of Oxford’s alarming prediction that 47% of existing jobs would be taken over by robots and AI within the next 20 years could have been made at any time in the past 250 years the fears remain.
Earlier this year Bill Gates entered this debate when he stated in an interview with Quartz2 that robots that take human jobs should pay taxes. This has the obvious attractions not only that, as Bill Gates says, we will be able to spend the money to finance jobs for which humans are particularly suited, such as caring for children or the elderly, but also that robots do not use services financed by tax revenue, such as education or the health services. However, is taxing robots possible, and, if so, is it desirable or necessary?
Bill Gates did not offer any suggestions about how such a tax might be implemented, but he did address some of today’s most important tax issues. What proportion of its tax revenue should a state raise tax from each of the three main tax bases:3 capital, labour and expenditure? How can a state counteract tax avoidance by large companies and wealthy individuals? Taxing robots would, in reality, be a tax on the capital employed by businesses in using them, although the precise manner in which such a tax would operate has not yet been explored. Would robots be effectively treated as employees and be “paid” a notional salary? Would this payment be deductible in calculating a business’s profits tax? How would the robots’ contribution be measured, given that there would be no equivalent of the labour market to set salary levels? Finally, would the current tax regimes relating to capital allowances (tax depreciation) and R&D be adequate?
About the Author
Malcolm James is Senior Lecturer in Accounting and Taxation at Cardiff Metropolitan University and has lectured and written widely on the subject of taxation. He has published The Taxation of Small Businesses for a number of years and has recently published The Glorification of Plunder: States, Power and Tax Policy which explores the relationship between tax policy and power.
1. Owen J. (2017): The Competition with Robots, available at http://economia.icaew.com/en/opinion/october-2017/robot-competition
2. Gates W. (2017): The Robot that Takes Your Job Should Pay Taxes, Quartz, available at https://qz.com/911968/bill-gates-the-robot-that-takes-your-job-should-pay-taxes/
3. A tax base is the aggregate value of financial streams or assets on which tax may be levied.
4. Lansley S. (2012); The Cost of Inequality, London, Gibson Square
5. Kleinbard E. (2014): We Are Better Than This, Oxford, Oxford University Press
7. Muckett J. (2017): “Robot Tax” Would Suppress Growth, Says Report, available at http://economia.icaew.com/en/news/november-2017/robot-tax-would-suppress-growth-says-report
9. Varoufakis Y. (2017): A Tax on Robots?, available at http://economia.icaew.com/en/opinion/february-2017/yanis-varoufakis-bill-gates-a-tax-on-robots