If robots steal our jobs, maybe we should make them pay tax | Fin24
 
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If robots steal our jobs, maybe we should make them pay tax

Jun 10 2018 09:29
Laura Paddison, Huffington Post US

Walk into a restaurant in San Francisco and you are greeted by a wall of numbered cubbyholes with acrylic doors. Dotted around the room are screens for placing orders. What you won’t find is a person to serve you. There’s no counter and no human to take your order or hand over the food.

Instead, customers scroll through the menu of quinoa and rice bowls on the in-store screens or on a mobile app, tap in their order and wait for their name to flash on one of the cubbies, where their food will be waiting.

This is Eatsa, an automated restaurant. Well, sort of. There are still humans preparing food behind the scenes. But the company hopes to eventually automate this process, too.

The concept restaurant, while it has had recent setbacks, represents another step in the onward march of automation. To some, Eatsa is a sign of innovation, providing people with fast, smooth service without the need to speak to another person. But for others, “there’s a big question mark about what this means for us as a society”. Not only what it means to have less human interaction, but also what it will do to jobs.

This is according to Jane Kim, who sits on the board of supervisors for the district the restaurant is in. Automation has been on Kim’s mind.

“This is one of the biggest issues that is facing our country over the next decade,” she says.

In response to her growing concerns about how it will play out in a city with one of the fastest-growing income gaps between rich and poor, she has an idea – tax the robots and use the money to help stem inequality.

The idea of a robot tax has bubbled up over the past couple of years, thanks to the backing of some high-profile figures, who propose it as a way to prevent all the benefits of automation from flowing to a tiny slice of wealthy people.

Benoît Hamon – a socialist candidate in the French presidential elections last year – made a robot tax a plank in his campaign.

Perhaps the most famous advocate is Microsoft billionaire Bill Gates. He told news website Quartz last year: “Right now, the human worker who does, say, $50 000 [R655 500] worth of work in a factory, that income is taxed and you get income tax, social security tax, all those things. If a robot comes in to do the same thing, you’d think that we’d tax the robot at a similar level.”

He believes taxing machines could slow the pace of automation, giving people a chance to retrain and giving governments time to put in place policies to protect people from intensifying inequality.

A robot tax has not been implemented anywhere. The European Parliament toyed with the idea, but ultimately rejected it, concerned that it would amount to a tax on progress and put the EU at a disadvantage. South Korea has probably come closest. With the aim of protecting workers, it implemented a halfway step last year by cutting a tax break available to companies investing in automation.

In San Francisco, Kim’s suggestion is to extend the payroll tax to robots and algorithms that replace human jobs. Funds raised would be funnelled into a “jobs for the future fund”, she says. This could pay for “workforce development and training for workers who have lost their jobs, such as truck drivers, retail and restaurant workers, even accountants and stockbrokers”.

She envisages using the tax revenue to tackle the low pay of many care sector jobs.

“We have these jobs that are difficult to automate, like childcare and home support service workers, which are currently jobs largely performed by older women of colour,” she says.

A report in February from global management consultancy Bain & Company supports Kim’s concerns about inequality. It found that the most vulnerable in society will be hardest hit by automation. It predicted that up to 25% of American jobs will be eliminated by the end of the 2020s – equal to 40 million workers – and depressing the wages of many more.

“Today’s level of inequality has already prompted growing public concern and debate,” the report says. “It seems reasonable to expect that, at significantly higher levels, popular criticism would intensify and increase pressure for social policies to address it.”

Taxing robots is one of the possible interventions mentioned in the report. However, not everyone is in favour.

A key criticism revolves around the practicalities of implementing the tax. What counts as a robot, for example? While a factory line robot seems clearly to be replacing human workers, what about digital assistants? Or vending machines?

Len Shackleton, an editorial and research fellow at the UK-based Institute of Economic Affairs, says: “There is no such thing as an individual robot, so you would be looking at something like the value created by robots, which is a heck of a difficult thing to define.”

He wrote a paper for the institute last month that set out why we shouldn’t panic about automation and artificial intelligence. In his report, he criticises the idea of a robot tax as “ill-judged”. Automation offers huge benefits to society, he says, “and to try to hold this back with these kinds of imagined fears – I call it a moral panic – has all the classic signs of witch-hunting: ‘Let’s find the nasty capitalist and burn them at the stake.’”

In addition to the difficulties of applying the tax, Shackleton raises the point that it could not be undertaken in one country alone.

“To do this in isolation would actually be suicidal for any medium-sized country, such as the UK,” he says. “It would mean that nobody would really consider investing in this country in anything that involved producing goods, because virtually anything could be classified as a robot.”

Kim is aware that it would not be a simple task to work out how to tax robots: “I don’t want to deny that there aren’t a host of definitional concerns that we need to tackle before we roll this out.”

This is why she has spoken to a broad coalition of advisers, including big tech companies, to thrash out how a tax could work in practice.

“I think tech wants to be part of the solution. They don’t want to be the bad guys. They don’t want to be viewed as the guys who took away everyone’s jobs.”

No one is suggesting robot tax is the sole answer to tackling the threat automation poses to inequality, but advocates say it could be a useful weapon in policymakers’ arsenal.

Sérgio Rebelo, a professor of finance at the Kellogg School of Management, looked at whether taxing robots could reduce income inequality and concluded that the tax would make sense.

“We find that, when robots are relatively expensive, taxing them is useful in terms of improving the distribution of income between routine workers, whose jobs can be automated, and nonroutine workers, who benefit from automation.”

But once robots become cheap, it’s no longer a useful mechanism.

“At that point, the best policy is to provide a basic universal income financed with income taxes,” he said.

Of course, a robot tax is not the only idea to deal with automation and inequality. A universal basic income, which would give everyone no-strings-attached money, has support from the likes of Elon Musk and Facebook co-founder Chris Hughes. There’s also the idea of guaranteed jobs – $15 an hour government jobs for anyone who wants or needs one – which has the backing of prominent Democrats, including senators Cory Booker and Bernie Sanders.

But, Kim says, these are not revenue-raising schemes.

“Everyone has great ideas about how to spend money, but no one is actually proposing how to raise that money.”

HuffPost’s This New World series is funded by Partners for a New Economy and the Kendeda Fund. All content is editorially independent.

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technology  |  tax
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