Taxing the Robots

Abstract

Robots and other artificial intelligence-based technologies are increasingly outperforming humans in jobs previously thought safe from automation. This has led to growing concerns about the future of jobs, wages, economic equality and government revenues. To address these issues, there have been multiple calls around the world to tax the robots. Although the concerns that have led to the recent robot tax proposals may be valid, this Article cautions against the use of a robot tax. It argues that a tax that singles out robots is the wrong tool to address these critical issues and warns of the unintended consequences of such a tax, including limiting innovation. Rather, advances in robotics and other forms of artificial intelligence merely exacerbate the issues already caused by a tax system that under-taxes capital income and over-taxes labor income. Thus, this Article proposes tax policy measures that seek to rebalance our tax system so that capital income and labor income are taxed in parity. This Article also recommends non-tax policy measures that seek to improve the labor market, support displaced workers, and encourage innovation, because tax policy alone cannot solve all of the issues raised by the robotics revolution. Together, these changes have the potential to manage the threat of automation while also maximizing its advantages, thereby easing our transition into this new automation era.

Keywords: tax, automation, robot, technology, capital, labor, payroll tax, artificial intelligence, inequality, tax policy, innovation, robotics, unemployment, AI

JEL Classification: K34, K31, H21, H20, H25, H55, J30, O30, O33