
Why taxing robots is not a good idea - tomaskazemekas
http://www.economist.com/news/finance-and-economics/21717374-bill-gatess-proposal-revealing-about-challenge-automation-poses-why-taxing?cid1=cust/ednew/n/bl/n/20170223n/owned/n/n/nwl/n/n/E/8947035/n
======
tvanantwerp
From a policy standpoint, it would be a nightmare to define automation to be
taxed. What counts as automation? Should I be taxed when I say "OK Google,
remind me to blah blah blah", which theoretically negates the need for me to
hire a human assistant to whom I would dictate? Should I be taxed for using a
spam filter to sort through my emails and discard the junk for me? Where,
precisely, would policymakers be able to draw a clear line between "tax this
automation" and "don't tax this automation"?

~~~
svantana
Exactly, and nevermind the automation that has been taking place in the last
5000 years or so. Gutenberg's printing press displaced the monks who manually
copied bibles -- should printing presses be taxed to parity with human labor,
so that printing one page of a magazine costs $100? I find it bizarre that a
guy as bright as Gates would support such an unworkable idea.

~~~
cjlars
The problem, if there ends up being one, is the speed of displacement. People
worry that too much downward pressure on so called 'middle class' jobs will
create another 30 year stretch of zero wage growth for a big part of the
population, which in turn puts a lot of political pressure on the system to
'do something'.

Very hard to say if that will come true though, if automation dramatically
speeds up, we would see a surge in productivity. Yet in recent years, we are
seeing slower, rather than faster productivity growth relative to the long
term trend. Take note that the doomsday jobs predictions implicitly forecast
that we'll be making more stuff, using less effort, meaning society will be
richer.

From a tax policy perspective, a VAT addresses Gate's concerns pretty well.

------
conanbatt
I do wonder what a robot tax would look like: is gmail a robot? Is Alexa a
Robot? Is Tesla a robot?

I think this stems from the basic idea that we always find it compelling to
tax someone else, and what better to tax that which cannot defend itself. But
then you realize a robot is like a hammer, and i dont think the hammer cares
about filing to the IRS.

~~~
delinka
That seems a bit pedantic. If you're taxing "hammers," you're taxing the owner
of the hammer, either at the point of sale, or perhaps as a tax on capital
equipment. So, if you're taxing "robots," you have to define "robot" and then
collect tax at the time of sale, or on capital equipment.

This whole idea (limiting a new tax to robots or the work they do) seems
fraught with disaster. I think it'd make more sense to increase tax on both
liquid capital and capital equipment to make the whole scheme

~~~
mason240
Do we really need to reinvent the wheel when it comes to taxes? Tax personal
and corporate incomes, just like we do now.

If someone is able run an automated business with no employees, just tax the
profits and income. Nothing changes.

~~~
briandear
Why tax any of that? What's wrong with a consumption tax? You buy something,
you pay a tax. Everything gets taxed equally and the government no longer gets
to pick winners and losers based on the relative political power of the entity
being taxed.

The way it works now is that taxes are used to manipulate behavior rather than
simply collecting money to provide services for citizens. Income taxes provide
too much power to governments.

~~~
mcguire
Not everyone gets taxed equally with a consumption tax. "You can only eat so
much filet mignon," to quote a professor I once had.

Non-progressive taxes (which is mostly what we have in the US now) provide too
much power to the wealthy. Further, in non-totalitarian societies, the
government isn't a separate entity---it is controlled by whoever has the most
power in the society.

------
yessql
Bill Gates really amazes me with his lack of vision. He thinks renewables are
not a solution to sustainable energy and taxing robots makes sense.

Bill,automating physical labor is not the issue, it's automating driving and
white collar jobs that's really going to disrupt society. It should be a tax
on the computer, not the robot, if you think taxing progress is a smart idea.

~~~
RealityVoid
Huh, interesting, I think he's right on both ends.

1) I think nuclear is superior to renewables.

2) I think taxing automation would work because it could kickstart some sort
of measure such as UBI. Automate enough and you need to tax more per
productivity instead of per worker, beause you'll eventually be forced to
implement UBI.

Something I wrote previously: "I tend to agree it would be a very good ideea.
Initially, it would disincentivise automation a little longer and minimum wage
could be raised a little more (and that's something I never thought I'd say,
that is a good ideea to DISincentivize automation, I'be always been of the
oppinion that automation is exceptionally usefull and be used asm much as
possible, but the life-shock of people affected by it would be lowered
somewhat, temporarily, by taxing it) and after a while, when it becomes
standard norm and automations slowly takes over more jobs,it could be used to
feed programs such as UBI. The ideea might have some merit."

~~~
Fantastic_T
So basically you believe in the Luddite fallacy that automation hurts workers.

[http://www.economicshelp.org/blog/6717/economics/the-
luddite...](http://www.economicshelp.org/blog/6717/economics/the-luddite-
fallacy/)

Welfare hurts incentives and misallocates capital from those who invest it
most effectively to those who reproduce most quickly.

~~~
artimaeis
I constantly see the Luddites brought up during discussions of how to handle
broad-scale automation and the economy of individual labor.

I understand in principle that they are similar in that, at the very reductive
viewpoint, machines are taking jobs.

Industrial machines such as the Jacquard Loom could only affect one industry
at a time. And in doing so we brought about the service economy. Service had
always been around, though history it was mostly as slavery, but because of
the industrial revolution we managed to slowly pivot to something stable.

The type of broad-scale automation we are on the verge of now threatens to
take literally anything that is capable of being done by humans. Entertainment
may remain safe, but the broad capabilities of modern robotics and its coming
advancements are certainly worth worrying about and thinking through, right?

After all, if it turns out that us "automation Luddites" are just wrong and
there _is_ some panacea to our woes - will we have lost anything by trying to
come up with means to protect the people?

~~~
Fantastic_T
>Industrial machines such as the Jacquard Loom could only affect one industry
at a time. And in doing so we brought about the service economy.

The power loom was but one variation of a more fundamental technology: the
steam engine, and more generally, the combustion engine.

Beyond engines, the Industrial Revolution saw a rapid shift to all kinds of
mechanisation, almost all of which were made possible by combustion engines.
This affected countless occupations. The occupation of the Luddites is but one
example. It was not limited to them.

I am not at all concerned about the speed and breadth of soon-to-occur
automation. Automation reduces costs, leading to people having more money to
spend on new types of products/services. The cost of a product/service being
roughly equal to the human labor needed to make it, we will always consume the
same amount of human labor (subject to changes in the supply of labour, as
people voluntarily drop out of the work force as their prosperity increases),
because a reduction in the consumption of labour in one field (as a result of
automation), leads to consumer savings, which are spent on consuming labour in
another field.

~~~
tzs
> The cost of a product/service being roughly equal to the human labor needed
> to make it, [...]

The cost of a product/service is only roughly equal to the human labor needed
to produce it when the human labor cost is significantly higher than the
material costs of producing that product/service. When you heavily automate
production, the cost of human labor becomes an insignificant factor in its
cost.

~~~
Fantastic_T
The cost of automated processes approaches zero over time, because automation
can be scaled up so easily, so the cost of human labour, and scarce natural
resources, will always trend toward 100% of the cost of production inputs.

------
crdoconnor
Automation has been putting people out of jobs since 95% of the population
were farmers. The new theory isn't "will automation put people out of a job?".
Of course it will. It always has.

The weird new theory put forward by a cadre of politicians, billionaires and
economists is that this is somehow a _new_ thing (sometimes referred to as
"the luddite fallacy"), and somehow a process that it is largely responsible
for all of the jobs that were deliberately offshored and destroyed via
austerity.

Of course, I couldn't possibly comment on why this cadre would want to
scapegoat the inevitable forward march of technology and baby boomers for the
problems caused by their corrupt backroom trade deals and lobbying.

You can tell if somebody is a REAL believer in the power of robots to
eliminate the need for human labor:

They won't object to increasing wages. They won't object to increasing
government spending. They won't object to any policy decision that is
"inflationary". Because, if robots really _were_ going to soon do, say, 60% of
jobs the countervailing deflationary pressures would be staggering.

------
mcguire
" _The thorniest problem for Mr Gates’s proposal, however, is that, for the
moment at least, automation is occurring not too rapidly but too slowly. The
displacement of workers by machines ought to register as an increase in the
rate of productivity growth—and a faster-growing economy. But since a burst of
rapid productivity growth in the late 1990s and early 2000s, America’s economy
has persistently disappointed on these measures._ "

Arguments from productivity measurements, especially the lack thereof, should
be heavily suspect. I can remember economists, like _The Economist,_
questioning the use of information technology as late as the late '90s, since
there weren't any productivity gains to be seen.

On the face of it, this isn't an unreasonable suggestion, since it might slow
and smooth the transition. The alternatives could be add ugly as the
alternatives to the industrial revolution.

On the other hand, it would be hard to implement and no one is going to adapt
before they absolutely have to.

------
bediger4000
Pretty typical pro-corporation-excluding-all-else "The Economist" stuff - all
from the point of view of how to maximize corporate welfare and profits,
ignores externalities forced on governments and workers, and also ignores
possibilities like not subsidizing robots by disallowing capital amortization.

~~~
matthewmacleod
I don't think that's a fair characterisation of The Economist's output or this
particular article.

------
tyingq
Bill Gates' interview where he talks about this, for context:
[https://qz.com/911968/bill-gates-the-robot-that-takes-
your-j...](https://qz.com/911968/bill-gates-the-robot-that-takes-your-job-
should-pay-taxes/)

~~~
krona
Also, the recent EU Commission proposal to regulate AI and robot tax:
[http://www.reuters.com/article/us-europe-robots-lawmaking-
id...](http://www.reuters.com/article/us-europe-robots-lawmaking-
idUSKBN15V2KM) (which was rejected last week)

------
skywhopper
Some better ideas: raising the minimum wage, increasing tax rates on
corporations and high-income individuals, dividends, estates, and capital
gains, and using that additional revenue to improve public education on all
levels, and reduce the cost of a college degree to a level that everyone can
afford without going into debt.

The higher taxes and minimum wages would encourage companies to invest in
automation, which would increase productivity, increasing corporate profits
_and_ government revenue. There'd be a huge jump in demand for jobs
installing, maintaining, designing, programming, and building automation
technology, and a general increase in demand across the board as more people
have more income because of higher minimum wages, which allow them to spend
more money, which in turn grows the economy.

The additional investments in education availability would be timely since
with higher demand for skilled labor and lower cost of tuition, people would
take more classes and become more skilled and get higher paying jobs. It's a
virtuous cycle.

Would inflation come of this? Probably some, but after a decade of sub-2%
inflation, we actually _need_ more inflation. Inflation raises prices, but it
also raises salaries. When huge swaths of the middle class are buried in
mortgage, student loan, and credit-card debt, inflation makes those debts
_smaller_, which means those people have more money to spend, which grows the
economy, creates jobs, and raises wages.

It can become a virtuous cycle, if only we were brave enough to kick it off.

~~~
tomp
> high-income individuals

I don't understand why there's such a drive for taxing high earners. I mean, I
do kind-of understand - they're a convenient target for the lower classes that
the elites use to redirect their anger - but I don't think it makes _economic_
sense.

If anything, we should be encouraging people to improve their skills and hence
raise their value/salary. Instead, taxation should be focused on _wealth_ not
_income_. It's been shown time and again that the bigger tax "dodgers"
(including those that legally pay very low tax) are the extremely rich
(including corporations) who own a lot of capital and can afford lawyers that
help them hide it in offshore accounts or other tax-advantaged vehicles (e.g.
trust funds).

~~~
spangry
The conventional argument is that capital is a more mobile tax base relative
to labour. It's probably not true in all cases, but it seems _mostly_ true.
'Wealth' can also be a remarkably difficult thing to measure, and a fairly
easy thing to hide (as you note).

As for progressive taxation, I've never heard a clear justification from,
well, anyone. Maybe it just seems obvious to everyone (I'm not being sarcastic
here; this is a genuine oddity that has bugged me for ages). In my opinion,
progressive taxation is justified because people _probably_ experience
diminishing marginal utility with respect to wealth. Which is just a fancy way
of saying: an extra dollar of wealth means much less to a millionaire than it
does to someone who is starving and homeless. So society probably makes a net
utility gain by taking a dollar from the millionaire and giving it to the
starving homeless guy.

Following from this are second order considerations like: how many dollars can
be taken from millionaires before they decide to put forth less productive
effort, and we all end up worse off? It becomes a constrained optimisation
problem and a question of degrees, although people seem hell-bent on treating
it as a question of absolutes.

~~~
tomp
Good points. Re: capital is mobile. Just because that's true _right now_
doesn't mean we shouldn't try to fix it. E.g. By strongly penalising tax
avoidance, forbiding tax havens or enforcing transparency, by stopping _free_
trade and implementing _fair_ trade instead (where companies/countries would
have tariffs imposed to offset any gains they get from less strict
environmental/employment regulation abroad), or even implementing worldwide
income (and dividend) tax like the US. I mean, there still are things that
rich Western countries can offer even to wealthy people, like freedom,
security, cultural diversity, ... so chances are the wealthy would stay here
even if they had to pay bigger taxes. Currently, of course, this doesn't
matter because they can just move their capital away even if they physically
live here, but as I suggested above, we could (should?) fix that.

~~~
spangry
Sorry I got to this late. You raise a good point, and have basically nailed
the crux of the issue. Just for background, I've worked as a tax policy
analyst for about half my career, advising Australia's federal executive
government. After quite a bit of thought (going on a few years now), my
conclusions are roughly the same as yours. Our options are either:

1) Give up on corporate tax and shift the tax burden on to less mobile bases
(e.g. land, consumption). This scenario seems to be slowly playing out across
the developed world (perhaps a bit faster in Ireland's case...)

2) Engineer some kind of grand international agreement on corporate tax rates,
kinda the Bretton Woods system for tax. This would be necessary because
there's such a strong incentive for countries to 'undercut' each others'
corporate tax rates (to attract foreign capital investment, tax havens being
the extreme example of this). Such an agreement would require: a specific (but
not too specific) agreement on minimum corporate tax rates, the participation
of countries representing most of the world's production output, and
provisions that levy punitive tariffs on non-complying, _and_ non-
participating, countries that go below the minimum rate.

Even up until recently, I've thought (2) to be basically impossible. But in
the past few days I've begun to think maybe I was wrong to rule this out
completely. In a strange way, Trump's presidency might be the golden (and
possibly only) opportunity for this. He seems to be just the right amount of
crazy to do it. I couldn't imagine an 'establishment' president going near
something like this. And I think only the US could lead such a process, maybe
with some quietly pre-agreed support from China. Given the capital flight
China is currently plagued with, their precarious public finances and their
main central banker publicly stating support for some kind of international
agreement on capital controls (I believe he actually invoked Bretton Woods),
it seems like a few stars are aligning.

I don't want to give you false hope here. I still think (2) is very difficult
and unlikely. It would have to be 'sold' to government skillfully. Perhaps our
'automated future' is the narrative to go with. Something like: As labour is
replaced by algos/robots, then by definition production becomes more capital
intensive. So more and more of the gains from production and trade accrue to a
fairly small group of capital owners.

It's conceivable that, in the not too distant future, some of these mega-
corporations will have revenues/net incomes that rival that of even large,
first-world governments. At this point, they will be an existential threat to
liberal democracy as they will have the means to field a sizeable 'private
security force'. Not to mention the immense soft-power they will wield when
they control most of the world's means of production.

So, although this may all sound crazy, it would be unwise and dangerous to
allow things to reach a stage where liberal democracy is in peril. Therefore,
we must tax corporations/capital in a way that leaves them nowhere to run
(i.e. via an enforced international agreement on rates). Also, a fair chunk of
this revenue will be redistributed to workers (perhaps it may even be enough
to fund basic income), so it's good populist policy that a populist leader
like Trump is well suited to selling (although he'll face significant
opposition from those suckling on the corporate teat i.e. mostly everyone,
including the 'mainstream' media).

Note: I'm not really keen on emotive arguments like the above, but I think
some version of the above is what it would take to sell a radical proposal
like an international agreement on corporate tax rates.

~~~
tomp
Thanks for your reply, I hope (2) succeeds! Although I think it's concievable
that it's done unilateraly, by a sufficiently big market (e.g. the EU).
Although ironically the EU currently seems a lot less open to any kind of
change than the US (but let's see until end of march, what the election
outcomes will be...).

Edit: anyways, if you ever have any updates, interesting articles/discussion
points, or need supporters for your politics, let me know!

------
_nalply
Tax money flows from organisations to people. The crucial idea: People are
behind organisations.

This way owners of companies getting rich have to pay taxes for their robots.
If they try to evade, government just has to wait for them getting the
proceeds sooner or later.

A loophole is money leaving the country. Tax it as if it has been paid to a
person.

------
popra
I believe this is the paper about the declining labor and capital shares
mentioned in the article
[http://home.uchicago.edu/~barkai/doc/BarkaiDecliningLaborCap...](http://home.uchicago.edu/~barkai/doc/BarkaiDecliningLaborCapital.pdf).

~~~
mcguire
I haven't read the paper you link to, but the comment:

" _A new working paper by Simcha Barkai, of the University of Chicago,
concludes that, although the share of income flowing to workers has declined
in recent decades, the share flowing to capital (ie, including robots) has
shrunk faster. What has grown is the markup firms can charge over their
production costs, ie, their profits. Similarly, an NBER working paper
published in January argues that the decline in the labour share is linked to
the rise of “superstar firms”. A growing number of markets are “winner takes
most”, in which the dominant firm earns hefty profits._ "

...is about the third one I have seen lately that the current financial system
is not good at doing what it is supposed to do: allocate capital investment.

~~~
spangry
I'm having a real hard time parsing that paragraph. Putting aside taxation,
only two classes of people receive some share of income from production:
workers & owners of capital. I don't understand how the income share could be
declining for both classes simultaneously. Where is the 'missing' income
going?

And bringing in the idea of winner takes all market structures just seems like
a non-sequitur. I'm struggling to understand the causal relationship between
market structure and the relative shares of income that go to labour and
capital owners.

~~~
mcguire
My original take on the statement was that corporate revenue wasn't going to
either wages or capital investment. The other options are

1\. The corporation's treasury, which is not economically useful past a
certain point, or

2\. Shareholders. In this case, since I don't see much evidence of major
dividends, that would mean stock buy backs, which are not a great way of
paying shareholders.

Returning money to shareholders is a great idea, if there is nothing better
the corporation can do with it. _If._

The paper is not making much sense to me, though.

------
6d6b73
Before Bill agrees to pay back taxes on all of copies of Windows, MS Office
and other robots that his company created, I don't think he has a right to
advocate taxing robots. He became the richest man alive simply because he
created company that helped people automate their jobs, and improve
productivity.

Does he want to tax my scripts created to help me automate my servers? No, why
not? Because they are just scripts? What if I put them on something like
Raspberry Pi and attach wheels to it? Is it now taxable?

For fucks sake, how smart people can have such dumb ideas is beyond me.

~~~
aplomb
It's hard to say how much of what Gates says/does is truly what he believes or
is a branding exercise for legacy purposes. The robot taxation seems like
populist appealing nonsense...

------
EGreg
_Particular workers may suffer by being displaced by robots, but workers as a
whole might be better off because prices fall._

May... might... this is the argument?

Let's be clear: robots disrupt the supply side and help the demand side. Full
stop. Let's not conflate the two in our arguments.

Yes, lower prices help the consumer. They also squeeze producers. See Amazon
wage slaves -> kiva robots, or Apple FOXCONN factories -> robots, or Uber
drivers -> self driving cars, etc etc etc.

When the producer is a human we have added constraints, whose cost goes up
every decade and century: we want the human to...

\+ Not starve... and now have a choice in good nutritious food from all over
the world

\+ Have access to water ... which is clean, potable and is pumped to their
faucet automatically

\+ Have healthcare ... that utilizes all the advancements of modern medicine
to reduce child mortality etc.

\+ Have primary education ... with multimedia on iPads instead of a huge
backpaack of heavy books

\+ Not be homeless ... while having their own apartment with enough living
space to be comfortable

\+ Utilities ... inclding broadband internet and a basic cellphone plan.

etc etc.

These demands are larger than, say, in medieval times, when serfs worked the
land. We also have quite more wealth as a society thanks to advances in
automation and information, and just building upon previous results.

Thus we can afford to get the basics taken care of unconditionally for all
members of society.

It doesn't have tk be Unconditional Basic Income. A better method is Single
Payer Systems, which we already have in many countries. Single payerfor
education, public schools, healthcare, etc.

NOTE: this is not the same as government provided housing, education, etc.
There shohld be vouchers that let people choose the provider. And it would
only cover the basic service. Providers would compete to offer that basic
service to the huge pool of buyers - WHO DO NOT COMPETE WHEN IT COMES TO THE
BASIC SERVICE LEVEL. This is the key. Consumers compete on how much they pay,
that's it. The single payer sets the price for the basic level. Prices
therefore go down. (See eg Medicare or single payer systems around the world.)

For example a "Food Stamps for All" program where the first $100 a week is
loaded onto SNAP cards for everyone, including millionaires. After that they
are free to do whatever they want. We might even require (LOCAL!!) ID to use
the card for food, to prevent ID theft. To starve, a poor person would have to
explicitly sell their last food aftr buying it. Same with "Medicare for all"
and "Housing for all".

This can be done on a local level. Everyone in NYC or SF gets taxed and gets
$1000 a month in housing vouchers which landlords would be free to accept, or
not. Most would, just like most doctors choose to accept insurance.

Where will that money come from? That's a silly question. People ALREADY have
to pay for food if they live in a city. This simply makes the whole thing
cheaper by squeezing the producers further. The producers may introduce
robots, pay less to CEOs, or whatever, in order to get access to all that
volume. But the one thing they won't be able to do is raise prices because
some buyer might defect and pay them (shout out patio11). They can do that for
premium services but never the basics. That is a GOOD thing for everyone
because everyone needs the basics. Bill Gates said the burger still tastes the
same when you are a billionaire.

So the end result is cheaper for the consumers, not more expensive. It is just
a question of how to get from here to there. Being able to phase it in on a
city level and really try it is a good feature of any program.

If you're a Conservative, consider that you most likely already support this
in Primary School Education (vouchers and single payer for all) but for some
reason oppose it in Healthcare etc.

If you're a Libertarian or Anarchist: listen, I'm a minarchist! I want to get
government down to one thing: taxing and running single payer systems for
thins we all need. Maybe that includes the army but nowhere near the amount
the US has now. What I would like to see is single payer systems for basic
levels of every thing people have come to expect.

The argument that someone is getting something for nothing is an even sillier
argument.

We all live in the 21st century people!! Just by being born at a certain time
we get things that even kings could only dream of, for nearly all of human
history. Many people _already have_ single payer systems.

And you are jealous that someone lives in the 21st century has a safety net,
so if they don't work they don't starve?

You are jealous someone doesn't live as a serf on the land, who doesn't eat if
he doesn't work?

You have the same protection! The same equal opportunity. Many of them are
jealous of you for having been born in a more wealthy place.

Stop the jealousy. Single payer allows equal opportunity for all. It allows us
to abolish minimum wage. Let people learn new skills, make contributions to
copyleft / patentleft, discover new drugs, spend time raising their children
well, instead of working a dead end uber driver or macsonalds job which will
be automated soon. That's the real solution. If you're going to do anything,
ensure everyone has the minimum first.

------
exabrial
Literally one of the dumbest proposals I've ever heard. "I've got an idea,
let's tax the people that are producing safer, more consistent, higher
quality, less wasteful, more efficient, innovative products!"

------
dingleberry
the gov should tax algorithms instead.

think how many librarians (or other occupations) are made obsolete by google.

~~~
TheCoelacanth
And how many secretaries are made obsolete by Word and Outlook

------
vixen99
A tax on tools, a tax on doing something more efficiently?

