Continuous, aggressive innovation has been a key component of America's success since its founding over 200 years ago. As such, the country's taxing authorities have historically gone to great lengths to encourage innovation through tax incentives, public private partnerships, etc. That is, until now.
In a rather stunning Quartz interview a few weeks back, Bill Gates, who ironically made his fortune from innovation, proposed that automation should be taxed rather than incentivized.
Robots are taking human jobs. But Bill Gates believes that governments should tax companies’ use of them, as a way to at least temporarily slow the spread of automation and to fund other types of employment. It’s a striking position from the world’s richest man and a self-described techno-optimist who co-founded Microsoft, one of the leading players in artificial-intelligence technology.
In a recent interview with Quartz, Gates said that a robot tax could finance jobs taking care of elderly people or working with kids in schools, for which needs are unmet and to which humans are particularly well suited. He argues that governments must oversee such programs rather than relying on businesses, in order to redirect the jobs to help people with lower incomes. The idea is not totally theoretical: EU lawmakers considered a proposal to tax robot owners to pay for training for workers who lose their jobs, though on Feb. 16 the legislators ultimately rejected it.
“You ought to be willing to raise the tax level and even slow down the speed” of automation, Gates argues.
And while we would have thought that taxing innovation would seem like a kooky idea to pretty much anyone other than maybe a couple of eccentric billionaires and Bernie Sanders, San Francisco city manager Jane Kim seems to be completely sold on the idea. Per Fast Company:
Kim says she read Gates’s interview and wondered if a robot tax might help the city deal with inequality. “We need to think about investments in our society that don’t exacerbate the wealth and income gaps that we already see today,” she tells Fast Company. “We don’t want to become a third-world country where there’s a big divide between the very rich and very poor.” San Francisco has one of the biggest income gaps in the country, according to figures from the Brookings Institution.
Kim, who represents areas like Union Square, the Tenderloin, and Civic Center, is setting up a working group to consider how an automation tax might work. She hopes it will include representatives from the tech community, academia, and unions, and that it can work through some of the practical questions. These include how much revenue the city stands to lose from lost payroll taxes due to automation, and what industries might be most affected. “It’s not only going to be manufacturing and truck drivers. It’s also going to be restaurants, hotel workers, and health care, which form a strong base of employment in the city,” she says. The tax would be paid by companies adopting robots over workers, not by robot-makers.
Kim sees revenue raised from the tax going toward education. She notes that an increasing number of jobs require a college degree, meaning that the tax could have a role in making college more affordable (the city is already taxing high-end real estate to pay for free tuition). Like Gates, she also favors exploring ways to slow the automation wave, allowing government and business to put in policies that help people transition. “It may be that government needs to play a role in regulating automation over time, so we can absorb job displacement at a rate that’s more sustainable for our country,” she says.
Most of all, Kim–possibly the first public official in America to publicly support a robot tax–is keen to experiment. “We are the center of the tech world here in San Francisco. There is a broad concern about automation and job displacement in the future,” she says. “We want to be the first to put ideas out there, so they can be explored. Then we want others to follow.”
Of course, implementing such a tax is more complicated than the starry-eyed, snowflake city manager might think...but the fact that it's even getting traction is still quite concerning.
Many economists are skeptical about the workability of an automation tax, not least because it’s hard to define exactly what harmful automation is. If McDonald’s replaces a server with a robot, it’s clear that a worker has lost a job to a machine. But if an office puts in an answering machine, it may be that the worker is just doing something else than answering phones all day. Automation could have positive effects, for instance allowing people to avoid dangerous work, or to retrain and move up the wage scale.
These concerns were enough to derail a robot tax proposal put forward by some European lawmakers this year. But, a report from the European Parliament did suggest other radical ideas, including requiring companies to report robot adoption, and the concept of “electronic personhood” where robots would have some of the rights and responsibilities of human beings.
Perhaps Bill Gates and Jane Kim have suddenly forgotten that American companies compete in an international marketplace? Or, perhaps they're convinced that China will simply 'pinky swear' to not take advantage of America's festering, misinformed, liberal policies.