by Mish

Today, entrepreneur Bill Gates, founder of Microsoft, endorsed the idea.

What does Gates want to do with the money collected? Here’s the answer: Flush it down the toilet.

In a Quartz interview, Bill Gates proposes The robot that takes your job should pay taxes.

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.

Quartz: What do you think of a robot tax? This is the idea that in order to generate funds for training of workers, in areas such as manufacturing, who are displaced by automation, one concrete thing that governments could do is tax the installation of a robot in a factory, for example.

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.

Fortune on Robot Tax

Fortune discusses the proposal in Bill Gates Says Robots Should Be Taxed Like Workers.

The idea of what amounts to a tax on efficiency would seem anathema to much conventional economic wisdom. For decades, the dominant line on automation has been that displaced workers shift into more productive roles, in turn growing the total economy.
But that thesis has begun to show cracks—as Gates puts it, “people are saying that the arrival of that robot is a net loss,” demanding greater active engagement with job retraining and other programs that target impacted communities.
While Gates resolutely comes down in favor of government’s role in managing automation’s impacts, he offers two points that should be at least slightly compelling to free marketeers.
First, Gates says, the impact of robotics and artificial intelligence in the next 20 years will be a much more concentrated version of the steady, incremental displacement that was common throughout the 20th century. The market alone won’t be able to deal with the speed of that transition—and, Gates further suggests, much of the potential for putting free labor to better use will be in the public sector.
Second, and probably even more importantly, Gates says automation won’t be allowed to thrive if the public resists it.

Tax on Efficiency

Good grief. It’s hard to know where to begin rebutting such idiocy. But the article does raise an important construct regarding a  tax on efficiency.

Four Questions for Gates

  1. Retrain workers to do what?
  2. How will the government, Bill Gates, or anyone else know the correct retraining field?
  3. How will the government or anyone else know the number of people needed?
  4. Who pays the robot tax?

No one can possibly answer the first three questions, accurately. But I can answer the fourth.

Robots will never pay a tax. And if the owners of robots have to pay a tax, they will have to jack up prices accordingly.

What Gates is Saying

  1. Too much efficiency is a bad thing.
  2. Money that buys more goods and services is a bad thing.
  3. The government knows better what to do with your money than you do.

Ultimately, consumers will foot 100% of any robot tax.

More accurately, consumers will foot far more than 100% of any robot tax collection because government bureaucrats will waste at least 50% of the amount collected while putting funds deployed in wrong areas or by overpaying contracts awarded.

Convoluted Thinking

Curiously, Gates argues we need to tax efficiency to the point it’s no longer efficient or the efficiency will die on its own accord because “automation won’t be allowed to thrive if the public resists it.”

Mike “Mish” Shedlock

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