A recent comment by Bill Gates that robots that take human jobs should “pay” taxes, or be taxed, has stirred debate in the artificial intelligence, economic and legal worlds. Numerous questions emerge from this debate, the most pertinent being who will actually be paying the tax. This may be solved by creating a legal entity for the robot to pay taxes, just as is done to tax corporations.
Many innovators in the emerging companies sector believe that automation, or at least partial automation, is inevitable in a capitalistic society, as we constantly strive for more efficient and accurate solutions.
Technology companies researching and developing robots have astronomically high costs, which is passed on to their customers, the businesses who purchase the robots. From an economic standpoint, a tax on the businesses for purchasing such robots is akin to a price increase, which lowers sales. If the companies sell fewer robots, it will be harder to justify their high initial investment in developing new technologies. Overall, innovation in this sector could suffer if the robotic industry is burdened by heavy taxes.
Customers, on the other hand, simply will not see any of the savings inevitably reaped by businesses. Assume a factory (or a restaurant, or customer service center) that is not automated employs 200 workers at $10 an hour (8 hours a day, 5 days a week, 52 weeks a year). This factory wishes to purchase “robots” to automate processes (an initial investment of up to millions of dollars) to decrease the burden of paying $4,160,000 in wages each year. This one time investment would bring their costs down and allow for lower prices. Most factories around the globe have already embraced this concept to some extent, and are not currently taxed for their automated processes. Any tax imposed on robots would narrow the savings gap that consumers would share in the form of lower prices.
On the other hand, if robots are taking over jobs ordinarily performed by humans, we could see a rise in unemployment and thus a corresponding drop in tax and social security payments made to the government. A tax on robots could help offset these losses.
Although robots have been replacing humans for years in many industries, the creation of more advanced robots has once again raised the question as to whether robots should be taxed like the humans they are replacing. Overall, despite the debatable philosophical standpoints on taxation, it is safe to say that there are consequences lying beneath the surface of such a proposed tax.