The Case for a Robot Tax

Advocating for a tax on robots might sound futuristic, yet it underscores a pressing issue: the automation of labor, often manifested in robotic technologies, is displacing human workers across various industries.

The COVID-19 pandemic has expedited this trend, as millions of individuals have lost their jobs. By May 2020, over 33 million people sought unemployment benefits in a workforce that previously peaked at 165 million in February of that year.

As federal aid dwindles, many unemployed individuals will find themselves without benefits. In 2016, approximately 26 million non-farm sole proprietorships existed, with a significant portion lacking employees. Consequently, many of these self-employed individuals were ineligible for unemployment insurance. However, the Coronavirus Aid, Relief, and Economic Security (CARES) Act enabled independent contractors to receive benefits, though these may cease if Republicans maintain control of Congress in 2021.

Businesses are also facing demands for safer working conditions, especially from unionized workers, a concern that robots inherently bypass. The pandemic has introduced a strong incentive for companies to expedite automation processes.

Elon Musk, the Tesla and SpaceX founder, articulated a grim forecast in 2017, stating, "There will be fewer and fewer jobs that a robot cannot do better (than a human)." To counteract this, influential figures like Bill Gates have suggested implementing a robot tax to address the societal implications of automation. Gates argues that while automation can enhance efficiency, it is crucial to redirect some of the resulting profits into community support, potentially through taxation on robots.

Mark Cuban, owner of the Dallas Mavericks, echoed this sentiment, emphasizing the need for a robot tax to prepare for the impending unemployment crisis due to automation. He even proposed that part of the tax be paid in company stock.

According to a 2017 study by PricewaterhouseCoopers, an alarming 38% of U.S. jobs could vanish due to automation by the early 2030s, particularly in transportation, manufacturing, and retail sectors. Conversely, Treasury Secretary Steve Mnuchin downplayed these concerns, asserting that AI and robotics were not imminent threats.

Business leaders, however, recognize the competitive pressure to automate to stay viable. At the 2019 World Economic Forum, executives expressed a desire to automate swiftly despite potential societal backlash. They contend that affected employees can be "reskilled," though a 2019 World Economic Forum report revealed that only one in four displaced workers could be effectively retrained by private-sector initiatives.

Legislative interest in a robot tax has been limited. Former San Francisco Supervisor Jane Kim launched a task force to investigate automation taxes, linking income disparity to robotic usage. Similarly, New York City Mayor Bill de Blasio called for a robot tax during his presidential campaign, but no substantive proposals have emerged in Congress.

The staggering rise in unemployment has plunged the economy, with consumer demand—accounting for 70% of economic growth—falling sharply. This decline leads to decreased sales and profits for businesses, prompting further layoffs and perpetuating the cycle of reduced demand.

Donald Trump campaigned on restoring jobs for those displaced, particularly in the coal industry, where various factors, including automation, contributed to job losses. However, he largely overlooked the role of automation, focusing instead on regulation. Conversely, Hillary Clinton acknowledged the inevitability of job losses due to automation, proposing a comprehensive plan for retraining and support.

This context makes a robot tax an appealing political solution. It represents a shift from traditional welfare spending to a more direct response to job displacement. By taxing robots that replace workers or diminish wages, the savings from automation could be redirected to support workers and fund training programs for new opportunities.

A robot tax could help counteract the trend of wealth concentration among business owners and investors, ensuring that some profits are allocated to maintaining living standards for displaced workers. As Congress approaches critical discussions this November, now is the opportune moment to advocate for a robot tax as a viable strategy to revive the economy and create job opportunities for those affected.

In this video, Bill Gates discusses the implications of automation on employment and proposes a robot tax to mitigate the societal effects of job displacement.

Chapter 2: Addressing Automation's Impact