The robot that takes your job should pay taxes, says Bill Gates

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Taxing usage of robots is a great suggesyion by Bill Gates! Perils of automation?

The robot that takes your job should pay taxes, says Bill Gates


Quartz: What do you think of a robot tax? This is the idea that in order to generate funds for training of workers, in areas such as manufacturing, who are displaced by automation, one concrete thing that governments could do is tax the installation of a robot in a factory, for example.
Bill Gates: Certainly there will be taxes that relate to automation. Right now, the human worker who does, say, $50,000 worth of work in a factory, that income is taxed and you get income tax, social security tax, all those things. If a robot comes in to do the same thing, you’d think that we’d tax the robot at a similar level.
And what the world wants is to take this opportunity to make all the goods and services we have today, and free up labor, let us do a better job of reaching out to the elderly, having smaller class sizes, helping kids with special needs. You know, all of those are things where human empathy and understanding are still very, very unique. And we still deal with an immense shortage of people to help out there.
So if you can take the labor that used to do the thing automation replaces, and financially and training-wise and fulfillment-wise have that person go off and do these other things, then you’re net ahead. But you can’t just give up that income tax, because that’s part of how you’ve been funding that level of human workers.
And so you could introduce a tax on robots…
There are many ways to take that extra productivity and generate more taxes. Exactly how you’d do it, measure it, you know, it’s interesting for people to start talking about now. Some of it can come on the profits that are generated by the labor-saving efficiency there. Some of it can come directly in some type of robot tax. I don’t think the robot companies are going to be outraged that there might be a tax. It’s OK.
Could you figure out a way to do it that didn’t dis-incentivize innovation?
Well, at a time when people are saying that the arrival of that robot is a net loss because of displacement, you ought to be willing to raise the tax level and even slow down the speed of that adoption somewhat to figure out, “OK, what about the communities where this has a particularly big impact? Which transition programs have worked and what type of funding do those require?”
You cross the threshold of job-replacement of certain activities all sort of at once. So, you know, warehouse work, driving, room cleanup, there’s quite a few things that are meaningful job categories that, certainly in the next 20 years, being thoughtful about that extra supply is a net benefit. It’s important to have the policies to go with that.
People should be figuring it out. It is really bad if people overall have more fear about what innovation is going to do than they have enthusiasm. That means they won’t shape it for the positive things it can do. And, you know, taxation is certainly a better way to handle it than just banning some elements of it. But [innovation] appears in many forms, like self-order at a restaurant—what do you call that? There’s a Silicon Valley machine that can make hamburgers without human hands—seriously! No human hands touch the thing. [Laughs]

https://qz.com/911968/bill-gates-the-robot-that-takes-your-job-should-pay-taxes/

 

[tks]

I like Bill Gates's Idea.

Here is contrarian view that appeared in Forbes Magazine
Source:

http://www.forbes.com/sites/timwors...-the-robots-stealing-our-jobs/2/#1004da226d6a
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Bill Gates has put forward an odd idea, that we should tax the production of those robots as they all come to steal our jobs. This is a bad idea, an error, we should do absolutely no thing. The error stemming from a misunderstanding of the production of value and what happens to it when produced.

It's entirely true that Bill Gates is very much brighter than I am. That he is one of the world's richest people and I an economic scribbler is not because my intellect outshines his. However, it is still true that we all have our advantages, comparative or absolute, and here this is one of mine, a slightly finer understanding of the basic economics at play here.

My colleague Ian Morris likes the idea but this too is an error I'm afraid:

His most recent musing was on the subject of how we solve the impending problem of robots taking human jobs. Gates suggests that the answer is to tax them like humans. It's bafflingly simple, and actually very smart. The video for this is on Quartz, along with a written interview if you'd like to see it in its original form.

Expanding on the idea Gates says that if a worker does $50,000 worth of work, that is taxed. He says "you'd think we'd tax the robot at a similar level." And if you think about it, it does make a lot of sense. Robots will be depriving humans of work, so to support those humans the company deploying them will continue to pay tax for their employment, this will then be used as a way to support the rest of society.

Sorry about this, no, it's a dreadful idea.

Bill Gates, the co-founder of Microsoft and world’s richest man, said in an interview Friday that robots that steal human jobs should pay their fair share of taxes.

“Right now, the human worker who does, say, $50,000 worth of work in a factory, that income is taxed and you get income tax, Social Security tax, all those things,” he said. “If a robot comes in to do the same thing, you’d think that we’d tax the robot at a similar level.”

No, really, it's an entirely awful thing for us to do. The original interview is here at Quartz:

And what the world wants is to take this opportunity to make all the goods and services we have today, and free up labor, let us do a better job of reaching out to the elderly, having smaller class sizes, helping kids with special needs. You know, all of those are things where human empathy and understanding are still very, very unique. And we still deal with an immense shortage of people to help out there.
So if you can take the labor that used to do the thing automation replaces, and financially and training-wise and fulfillment-wise have that person go off and do these other things, then you’re net ahead.

Now all of that is entirely true. It must be true for it's very similar to what I've been saying around here, that being the definition of truth, agreeing with me. Even putting my ego aside it's still all entirely true. The real growth in wealth and or incomes that comes from automation is that the labour displaced goes off and produces something else that we can them all consume. So, imagine that the robots write badly parsed economics pieces and this frees up the labour of one T Worstall to go change babies' nappies. The world then has, as now, an entirely adequate supply of badly parsed economics columns and also has some (small, I'm not very good with nappies) increase in the number of dry and smiling babies. We're richer by the value we place on the dry and smiling babies.

But does that mean that we should thus tax the algorithm writing the columns? Nope, not at all, because we don't want to tax production at all. We might possibly want to tax incomes but the best method is to tax consumption. And it's odd that Gates doesn't get this for he has in the past argued in favour of the progressive consumption tax (see, he agrees with me again, of course he's right) which is the right way to do this.

The confusion Gates has got himself into is through not thinking clearly about production, consumption and incomes. They each, by definition, equal each other, we know this from our standard GDP accounts. Everything that is produced is consumed, everything consumed must be produced. And either all production or all consumption, those two being equal, is the same as all incomes in the economy. This is not an arguable point, it's the definition we start with.

What Gates is saying here is that we tax the production of the worker and we should thus also tax the production of the robot. But we don't tax the production of the worker at all. We can and do tax the income of the worker (income tax etc) and sometimes too the consumption of the worker (sales tax) but we really don't tax the production of the worker.


No, the corporate income tax is not one on production either, that's on the income to the capitalists. Even the taxation of resource rents, say upon oil being pumped up, isn't a tax upon production. In fact we make very certain that it isn't, that's a tax upon the existence of the oil to be pumped up, a tax upon the resource rent not a tax upon the resource production.

So, we don't tax production now. And of course we don't want to tax production. As we all know the more we tax something the less we'll have of it. Production is the same as incomes or consumption--so why would we want there to be less production by taxing it? OK, sure, but we've got to get our tax from somewhere, so where are we going to get it when the robots are making everything?

Exactly the same places we get the tax revenue from today, from some combination of everyone's incomes and or consumption. Because look again at our GDP definitions. Production rises because the robots do all the stuff that can be automated (columns berating people about economics) and those displaced move off into other activities (creating dry and smiling babies). We've a rise in production therefore--this must, absolutely, mean a rise in both incomes and consumption. And as long as we continue to tax incomes and consumption then we'll be getting the tax revenue we need.

We can even test this little idea. Move that action back a generation to what made Bill Gates his fortune. Somewhere between the first wordprocessor and Word, between Lotus 123 and Excel, we destroyed millions upon millions of jobs for typists, accounting clerks and so on. This raised productivity and made us all richer (the money pit of productivity destruction that is Powerpoint is another matter of course) as those newly liberated went off and started producing something else that we could consume and which would earn them their income. We do not and have never taxed computers nor the programs that run on them and yes, they are in the economic sense exactly the same as the robots being talked about now. Just a form of automation. We have maintained much of the tax system upon income and consumption that we used to have then though. And the share of GDP that goes to government in tax has also stayed really quite constant. Sure, small movements this way and that but the Feds still get some 18% of everything, US government at all levels around 26% and these numbers just haven't moved all that much over these decades.

We don't in fact tax production instead we tax incomes and consumption. There is going to be no difference at all in this when the robots take our jobs just as there wasn't when the looms took the weaving jobs, the cars the coachman's and Microsoft Office the secretary's. For all of that increased production must, by definition, end up as an income to someone, consumption by someone. And as the robots won't have incomes and won't be doing any consuming we can leave their tax affairs alone and just tax, as we always have done and always will, the humans. Fortunately this also accords with a very basic point about tax. All taxes come out of the pocketbook of some live human being. Just because there's only us here to pay taxes.