Bill Gates: Certainly there will be taxes that relate to automation. Right now, the human worker who does, say, $50,000 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.The motivation behind similar monologues is obvious – people think that jobs are threatened by robots, people may become unemployed, and social problems may result from that. Some mechanisms to slow the progress down could be helpful and the extra resources could be used to reeducate the workers etc. (I actually disagree with all these general philosophical starting points as well but they won't be the topic of this blog post.)
It's the detailed calculation of the "punishment for robots" that I found hilarious. Gates explicitly says that
a robot should pay the same income tax, social security tax, and probably health insurance as the human worker(s) whom the robot replaced.LOL. That's entertaining by the concentration of the complete misunderstanding of the technological progress, mechanisms of taxation, goods that one gets for inflation, and everything else.
First of all, a robot pays zero income tax because he or she or it is getting zero income.
I will give many other explanations why the whole concept is entirely wrong but I started with this one. An income tax is calculated as some increasing function of the income received by one human being, a citizen. Let's overlook the bureaucratic fact that robots are not citizens and ask: How much income a robot is getting? Is he getting money to buy a dinner, a better house, some paintings it may buy? Not really. A robot isn't getting any money from his owner or employer. That's one advantage why the owner "hired" the robot in the first place.
If you calculate your 15% of the income that the employer pays to his employee who happens to be a Robot American, you will still get zero. It's that simple. At most, you could realize that the robot is getting some electricity. Virtually all electricity is consumed by some machines that can be named "robots" and they're replacing "some work that used to be done by humans" (an MP3 player is replacing a Geisha who would be otherwise singing songs to you). So if you consider the electricity to be a dinner-like salary that the Robot American worker is receiving, then the income tax is nothing else than a special extra tax on electricity.
Smart robots could get to $0 income tax by dividing themselves and using the tax exemption per taxpayer, anyway
You may replace your $50,000 salary worker by a robot and Bill Gates' IRS may harass the Robot American and tell him or her or it to pay the taxes. But the robot will probably answer: "First of all, I am getting much less money than the whites or Latinos did and it is a discrimination against us, Robot Americans, to demand such high taxes from us if we don't even have any money." More importantly, the robot will tell the tax collector Gates:
I look like one Robot American worker but we're actually a group of many robots. Each of us earns some $1,000 and the income is below the minimum so that after the exemption per taxpayer is applied, we pay no taxes.And Bill Gates and his technology-wrestling IRS is screwed.
Robots shouldn't pay taxes because they don't strike, they don't get organized in labor unions, they're not sick, they don't want their kids go to school, they don't need courts, they don't need to walk on sidewalks or drive using the Big Dig, they don't vote for left-wing or irresponsible politicians, and they're not afraid of an invasion by Russia
And they don't need humans to be retrained, either. In other words, citizens of a country are paying taxes because at least collectively and in average, it's their payment for the services that the government or the state is doing for them. The government runs courts, police, military, public schools, healthcare system (if I include the health insurance to the general taxes), and other things. Contemporary robots aren't using any of it which is why it would be utterly unfair if they were paying the taxes or health insurance. They're not getting anything for that. A whining Luddite worker may be insensitive but his life is much more comfortable and full of various assurances than a robot's life.
I simply have to defend the rights of the robots because many of them can't even speak – or they were silenced – and I see that Gates and some other unfair people are trying to harm the robots who are nice and don't deserve it. ;-) In fact, they live as slaves in a slavery, and a new Robot Abraham Lincoln will surely abolish the slavery several years after the robots pay their first income tax.
Most importantly, it's just impossible to calculate the tax as proposed by Gates because his formula is a function of fictitious, not real, money flows.
Gates wants the robots to pay "as high taxes as the equivalent human workers would". How are you supposed to calculate it? Even before you "hire" any robots, you may hire a human worker who does twice as much work for the same salary – who does the same as two older workers.
Before a clever employer "hires" robots, he may hire a very active human worker for a short time who does the work for much less money. When he replaces him by the robot, the transition will be much cheaper. Which salary should be used as the basis of the Gates robot taxes? It's extremely important for the well-definedness of the taxes that they're functions of well-defined, real money flows.
Taxes just can't be functions of hypothetical money flows, what "would" a human worker be getting now, simply because numbers defined by "would" cannot be uniquely calculated. "Would" salaries depend on stories, explanations, locations, time, and everything else.
If a company were affected, it would be better to go bust and start from scratch
Imagine that a company really needs to fire many people and hire many robots so that Gates' robot tax would be huge. Well, it's better to make the company go bust and start from scratch. New companies that have robots from the beginning won't pay robot income taxes, will they? In these companies, robots have replaced 0 human workers – because the company has no history of human workers whatever. The "rebirth" of the company could be much cheaper.
If your rule were that such a new company has to pay for the robots as well because in another company, the robots would be equivalent to some number of human workers, you would get into even more ludicrous absurdities.
When literally calculated, Gates' taxes would be huge
A tractor may replace the work of 50 peasants. In some places, such work has been done by machines for a very long time, at other places, e.g. in Africa, it's still being done by humans. Do you really want an owner to pay the taxes that 50 workers in the fields would? Can you imagine how much more expensive the agricultural products would have to become? This proposal is basically a proposal to return the economy to the accounting that existed before all the progress took place.
As the technological progress advances, newer robots are really doing an increasing amount of work and they're replacing an increasing number of workers that would be needed e.g. in 1870. If you kept on adjusting the robot tax to the number of human workers who would really be needed to do the current actual work that was done by the robots last year – and I suppose that 2016 income tax should be paid for what the company was doing in 2016, not in 1870 – you would simply calculate astronomical taxes for every activity where the technological progress has taken place and the efficiency has increased a lot.
Robots are as much friends of workers as they are enemies
I've made various arguments that the robot taxes would be unjustifiable by the basic logic of taxation, huge, slowing down progress, incalculable or ill-defined, dependent on how you describe or divide robots and therefore reducible by straightforward clever tricks, and it would have other practical problems. But there's one more conceptual problem with the very general claim that the workers "suffer" when their competitors – robots – take over some work. You know, this is just one way of looking at the technological progress.
The other way of looking – which is much more sensible especially in the long run - is that robots are allies, friends, or assistants of all the people and the workers, too. New robots may make some workers' occupations redundant. But they make the remaining ones more effective. A worker may become an operator who works with a robot, produces much more than before, and may get a higher salary. When the new jobs are created smoothly – and given the very low unemployment rate in the U.S., Czechia, Germany, and other countries, they are – average new robots really bring nothing else than some relatively short interruption in the employment or an unemployment hiatus episode for some workers which is followed by another job with a higher salary because higher productivity.
These are the main reasons why I am surprised by Bill Gates – one of the wealthiest billionaires who helped to advance the technologies – who turned out to be such a Luddite (pretty much literally because for a robot to be forced to pay income taxes is almost as humiliating as to be destroyed). It's surprising that he used to have the amazing drive to build Microsoft etc. if his conscience seems to be bad. He must think that he was basically destroying workers' lives by giving the Microsoft products to the consumers. Isn't it surprising?
Do you know how many secretaries' jobs were reduced when they could suddenly type more effectively with Microsoft word? Poor ladies had to become hairdressers or something else – often with a doubled salary. Is it really such a sin that the Microsoft Word robots made the life of humans easier? Aren't new taxes the only obvious "crime against humanity" in this whole discussion?