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A robo-tax

Published in Insights, The New Zealand Initiative’s newsletter, 3 March 2017

Microsoft founder Bill Gates copped a lot of criticism for demanding an income tax for robots. That is unfair. If anything, his proposal did not go far enough.

Mr Gates is obviously right to note that robots are replacing human beings in the workplace. Some experts predict almost half of all jobs may be made redundant by technological progress. Indeed, that was the motivation for Labour’s ‘Future of Work’ inquiry.

But a blunt income tax on robots is, of course, pure nonsense. It should at least tax the most productive robots a bit more than ordinary machines. Which means the tax ought to be progressive. This would also create a more level-playing field between humans and non-humans.

Because let’s face it: not having to pay income tax is only one of the advantages of robots. Robots also do not demand tea breaks; they do not go on holiday or parental leave; they do not get sick; they do not waste their time on the web; they rarely turn up late for work or drugged (just like migrants).

In short: They possess some unfair advantages over us humans, at least as far as productivity is concerned. Having said that, robots don’t cheer you up, you can’t have a chat over a coffee with them, and they don’t contribute much to a good working environment.

But to compensate for robots’ unfair productivity advantages, taxing them away is the least we can do for workplace fairness.

Mr Gates’ proposal is also timid in another sense. Robots are not only productive in themselves. They make everyone else around them more productive too.

So a worker who could produce 10 gizmos a day can now do 1,000 by programming a robot. But what does this make the robot? Well, precisely: a tool.

And here comes the rub: If you want to tax robots because of their productivity enhancing characteristics, why not tax other tools too?

So let’s tax the hammers that make carpenters more productive! Put a levy on meat grinders that help butchers! Introduce a shovel charge for gardeners who use them!

Indeed, let’s tax anything that has ever made us more productive. Think of all the office clerks made redundant by Excel, all the steno typists no longer needed because of Word, or whole legions of secretaries whose jobs were rendered obsolete by Outlook.

Which brings us back to Mr Gates. If he wants taxes on productivity-enhancing tools, let’s first confiscate the wealth his genius has created.

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