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Should we tax robots? A debate.

June 12, 2019
Photo of Ryan Abbott and Ryan Avent
Photo of Ryan Abbott and Ryan Avent
Photo of Ryan Abbott and Ryan AventJustin SAglio

Pro: Why not? We tax human labor. Con: It will slow innovation.

Background: The idea of taxing robots isn’t new, but it gained momentum a few years ago when Bill Gates pitched the strategy as a way to slow the job-destroying progress of automation. In a quick rebuttal, Lawrence Summers, a former economic advisor to President Barack Obama and past president of Harvard, called the proposal “profoundly misguided.”

Debate on: This week at EmTech Next, MIT Technology Review’s conference on the future of work, the battle continued. On stage the question was asked: will a robot tax help solve the problem of jobs being lost to automation? Arguing in favor was Ryan Abbott, a professor of law and health sciences at the University of Surrey  in the UK. Against the tax was Ryan Avent, the economics columnist for the Economist. Each has previously explained his position for and against.  

Most convincing: On the pro side, the argument is that by not taxing the machines as we currently tax human labor, we’re actually subsidizing robots heavily. We even provide tax incentives for more robots in the form of capital depreciation. So the argument isn’t to tax robots directly—it’s to more fairly tax capital equipment, which includes robots. If automation is more efficient, argued Abbott, let businesses decide to use more robots on the basis of efficiency, not of tax savings that favor machines relative to people. On the con side, Avent argued that a robot tax will not really help us deal with automation and that, in any case, the threat of robots taking jobs is overblown.

What we think: Sure, taxing robots won’t solve the problems of jobs being lost to automation. But taxing robots is not nearly as radical as it might sound, and it is far from a luddite reaction. We tax labor, and increasingly automation is replacing human labor. We should at least remove tax incentives that favor robots over people. The share of national income going to capital versus labor is increasing, and that’s a worrisome trend. While we don’t yet know if that is due to automation and robots or to other factors, it does argue that something is wrong. If we don’t tax the robots, we will need to think seriously about who will own them.

The verdict: Alas, the audience at EmtechNext disagreed. Some 70% of the attendees favored no robot tax.

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