Bill Gates wants Robots to Pay Income Tax

The world’s richest man wants robots to pay income tax – if they take humans’ jobs.

Bill Gates endorsed the idea of a “robot tax;” on automations that replace human workers, in video interview with Quartz editor in chief Kevin Delaney.

“If a human worker does $50,000 of work in a factory, that income is taxed,” Gates said. “If a robot comes in to do the same thing, you’d think we’d tax the robot at a similar level.”

The Microsoft Founder did not say how the tax would work but he did put a spotlight on one of greatest problems created by technological unemployment. Much of the tax money that funds governments throughout the world is generated by taxes on wages and salaries.

How will We Pay for Government?

In the United States Social Security and Medicare funded by the FICA (Federal Insurance Contributions) tax on incomes under $127,000 a year. Therefore most of the money that funds those programs comes from wages.

What happens when machines replace large numbers of people? Who will pay the tax?

The Social Security Trust Fund is projected to run out of money by 2034 with our present level of unemployment, CNN Money reported. Another Social Security Fund that finances disability payments might be tapped out by 2023. Under the present status quo, Medicare will be out of money by 2028.

We cannot pay for those programs with the workforce we have now. What happens when technological unemployment puts 15% or 20% of the population out of work?

Yes, the new economy creates a lot of jobs; many of which are more emotionally fulfilling than the old factory work, but many of those jobs don’t pay as much as manufacturing did. Today’s economy is generating lots of work for freelance writers, Uber drivers, dog walkers, nurse’s aides, Starbucks baristas and hairstylist but few welding jobs.

Why Robots will have to be taxed

We will still have to pay for government which makes the prospect of a tax on robots and other job-killing technology attractive. It would certainly be better than the current U.S. tax code which rewards companies that embrace technological unemployment.

When a manufacturer replaces workers with a robot it can write the price of the robot off on its income tax. Since the US has a 35% corporate income tax rate that can be a major savings. More importantly, it can also write the cost of operating the robot and the depreciation as it loses value over time off on taxes as well.

If the manufacturer kept the human workers; it would have to pay taxes for their FICA, their unemployment insurance and if it employed more than 50 people, pay for their health insurance under Obamacare. Replace the people with machines, eliminate those costs and receive a nice tax write off. Get the picture, the current tax code effectively rewards the use of job-killing tech.

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