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Should robots pay tax?

Earlier this year, in a widely-reported interview with Quartz, Microsoft founder Bill Gates suggested robots should pay tax. Gates pointed out that when a human worker earns $50,000, that income is taxed. So, if a robot does the same thing, why not tax the robot?
 
The interview prompted a lot of debate. Many commentators agree that while robots can’t pay tax themselves, businesses could be taxed for replacing human workers with robots. Advocates of such a tax say it could combat inequality and that the revenue raised could be put to good use supporting workers in areas such as nursing homes and health care where human skills are invaluable.
 
Gates is not the only one thinking about how the advance of robots will impact society and work. In a paper published in 2013, Carl Benedikt Frey and Michael Osborne, of the University of Oxford, suggested that almost half (47 percent) of all jobs are at risk because of automation. Such jobs include white collar occupations like accounting, auditing, market research analysis and marketing.
 
Ever since General Motors introduced the first industrial robot in the 1960s, robotic hardware has taken on more and more tasks that were previously carried out by human workers. Initially, this was mostly in the manufacturing industry but now robots are used in many other sectors. It is estimated that there are 1.7 million robots worldwide. These include self-driving cars, drones, robots used in industry, farming, entertainment, and many other areas. The legal profession which traditionally has been very resistant to change appears to be one of the last bastions of resistance to tech disruption. However, slowly but surely services like Courtsdesk in Ireland and LegalZoom in the US replace traditional legal services like writing a will, protecting IP etc. As accountants, we have already seen the introduction of products like Xero and Receipt-Bank which have effectively replaced the role of the traditional bookkeeper. and taxi drivers will ultimately lose out to self-driving cars while medical procedures and surgeries will increasingly be performed by mechanical robots. 
 
If Frey and Osborne are right about almost half of all jobs being replaced, this has huge implications. So it’s not surprising that taxing robots is a conversation worth having. However, not everyone thinks a tax is a good idea (surprise surprise). Some people argue that if investment in machinery is considered prosperity boosting why should investment in robotic machinery or AI be any different? Also, is a tax on robots just a shift from Income tax to Corporation tax bearing in mind that many corporations pay very low effective corporation tax rates anyway? Maybe this is why in February of this year, European politicians rejected a tax on robots and voted against a basic income for workers who lose their jobs to robots. Nevertheless, the European Parliament did vote in favour of adopting a report calling for a European agency for robotics and Artificial Intelligence. Could it be that said politicians realise that if and when our work is replaced by robots our dependency on the state will be impossible to hide as workers will no longer be in a position to exchange their labour for goods and services on their own terms? Robert Tressell’s The Ragged-Trousered Philanthropists comes to mind.

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