When one of the richest men on the planet has something to say, the world tends to listen. But that doesn’t mean everyone agrees with everything Bill Gates has to say.
The co-founder of Microsoft has floated the idea of instituting a “robot tax” as companies increasingly turn to automation to replace low-skill jobs.
“If a human worker does $50,000 of work in a factory, that income is taxed,” Gates told Quartz in an interview published Feb. 17. “If a robot comes in to do the same thing, you’d think that we’d tax the robot at a similar level.”
The idea was ridiculed by some in the technology and economics fields. “Taxing robotics is as intelligent as taxing software,” ABB Group CEO Ulrich Spiesshofer told CNBC. “They are both productivity tools. You should not tax the tools. You should tax the outcome that’s coming.”
“Why pick on robots?” former Treasury Secretary Lawrence Summers asked in a Washington Post opinion piece.
While Gates’ comments reflect an important tax issue, Malcolm James, a senior lecturer in accounting and taxation at Cardiff Metropolitan University, suggested it’s silly to think he was actually referring to taxing robots.
“Taxing robots would, in reality, be a tax on the capital employed by businesses in using them and might help to redress the long-term shift away from taxing capital,” he said.
An important debate on the matter just wrapped up in the European Union. In February, the Parliament rejected the idea of a robot tax on firms that own them to support or retrain workers who lost out on employment due to robots.
Data suggest that the threat of robots taking jobs will soon be a big deal, at least in the U.S. A 2013 study from the Oxford University and the Oxford Martin School concluded that “47 percent of total U.S. employment is in the high-risk category” of being lost to “computerization.”
Last month, the National Bureau of Economic Research published a study showing how the introduction of an industrial robot between 1993 and 2007 hurt wages and cut jobs. While economists Daron Acemoglu and Pascual Restrepo said up to 670,000 jobs were lost due to robots during that time period, the future might be a grimmer picture. “However, if the spread of robots proceeds as expected by experts over the next two decades, the future aggregate implications of the spread of robots could be much more sizable,” the authors wrote.
So far the Trump administration has shown no concern about robots’ stealing jobs from Americans.
When asked about it at a recent Axios event, Treasury Secretary Steve Mnuchin said, “It’s not even on our radar screen,” adding that it could be a problem in 50 to 100 years. “I’m not worried at all,” he said, adding, “In fact I’m optimistic.”
Those comments elicited fierce backlash from not only techies but also D.J. Patil, former U.S. chief data scientist in the Obama administration. He pointed to a late-2016 White House report on the convergence of technology and the economy, saying, “Read to see why we need to get ready now.”
In a Dec. 20 blog post on artificial intelligence, the Obama White House wrote: “Because the effects of AI-driven automation will be felt across the whole economy, and the areas of greatest impact may be difficult to predict, policy responses must be targeted to the whole economy.”
Both Spiesshofer and Summers argued the case that automation ultimately enhances the health and prosperity of society, something that Gates seems to agree with.
“If you could take the labor that used to do the thing automation replaces and both financially and training-wise and fulfillment-wise, have that person go off and do these other things, you’re net ahead,” Gates said.
But, he added, “You can’t give up that income tax because that’s part of how you’ve been funding that level of human workers.”
“Some of it can come on the profits that are generated by the labor-saving efficiency there,” he said. “Some of it can come directly in some type of robot tax.”
