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UPDATE: Why robots should pay taxes

UPDATE: Why robots should pay taxes

09/29/2017

By Kari Paul, MarketWatch

If we don't tax the robots, experts say, there will be even more income inequality

Robots are coming for us or, rather, for our jobs.

British politician Jeremy Corbin said this week he wants to tax companies that replace human jobs with robots to offset the negative effects of automation. The Labour leader said in a speech he wants (http://www.telegraph.co.uk/news/2017/09/26/jeremy-corbyn-plans-tax-robots-automation-threat-workers/)to "manage" robotics and technology "for the benefit of society as a whole."

He is the latest to suggest a tax on robots. With artificial intelligence and machine learning on the rise, automation is set to eliminate (http://www.marketwatch.com/story/this-is-how-many-us-jobs-robots-and-automation-will-create-over-the-next-10-years-2017-04-04) 25 million jobs by 2027, impacting service and manufacturing industries the most. Researchers from Northwestern University wrote (http://www.nber.org/papers/w23806.pdf) in recent paper "Should Robots be Taxed?" distributed by the National Bureau of Economic Research.

"Our analysis suggests that without changes to the current U.S. tax system, a sizable fall in the costs of automation would lead to a massive rise in income inequality," they wrote. "We find that income inequality can be reduced by raising marginal tax rates and taxing robots."

The idea of taxing robots was previously proposed by Microsoft (MSFT) co-founder Bill Gates, who said the robots (https://qz.com/911968/bill-gates-the-robot-that-takes-your-job-should-pay-taxes/) that take human jobs should pay taxes. The European Union also considered legislation (http://www.reuters.com/article/us-europe-robots-lawmaking-idUSKBN15V2KM) to tax robot owners and put funds toward training workers who lose their jobs to automation, but ultimately rejected it.

In "Should Robots be Taxed," researchers analyzed how robots could be taxed under the U.S. system and determined a lump-sum rebate independent of income would best slow the effects of automation. The amount robots should be taxed depends on how many jobs have been taken over by robots, the researchers concluded. This formula would work only for a society in which jobs have been partially automated, they argued. Employers of the robots would pay these rebates to the government to ensure a minimum income for all workers.

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