The Taxation of Robots and Its Global Challenges

Abstract

Robots are changing the world. In the past decade, we have already seen robots perform medical procedures, drive cars, serve as virtual assistants, analyze financial data, perform legal research, and win Jeopardy. These examples illustrate powerful new forms of automation that go beyond manual labor and assembly lines into tasks that once seemed impossible to automate. This is just the beginning. Robots now have the potential to invade almost all sectors of the economy and are expected to do so faster than previous technological changes. Many fear that millions will lose their jobs, leading to massive technological unemployment. To address these anticipated problems, there have been calls worldwide to implement a tax on robots. 

This chapter explores the reasons behind these calls and whether policymakers should pursue a robot tax. It provides an overview of the international implications of increased robot use and critically analyzes robot tax proposals from an international perspective, highlighting negative policy implications and practical issues. After demonstrating why a robot tax is not the best solution, the chapter suggests alternative actions nations should consider to address the challenges of the new automation era. As Erik Brynjolfsson observes, “This is a moment of choice and opportunity. It could be the best 10 years ahead of us or one of the worst because we have more power than ever before.” Thus, while a robot tax may not be the optimal approach, policymakers have a crucial responsibility to acknowledge the potential of robots and address the associated risks and challenges.

Keywords: robots, automation, robot tax, robotics, artificial intelligence, AI, tax policy, digital economy, tax revenue, law and technology, automation tax, international tax

JEL Classification: J08, H27, K34