Features; Opinion

Bill Gates is wrong: Don’t tax robots

Bill Gates made headlines when he suggested robots that take human jobs should be taxed at a similar rate as humans. The money, he said, could slow the rate of automation, and be used to fund government jobs.

Gates could not be more wrongheaded on this proposal.

The problem with Gates’ idea is that it assumes robots taking human jobs is something to be discouraged. The opposite is true. We should welcome robots doing more tasks for humans, thus freeing up humans to engage in other fulfilling endeavors.

Imagine the government took Gates’ approach with Microsoft computers to prevent their machines from taking jobs. Humanity would be worse off because of the unrealized productivity, connectivity, and convenience that would be impossible without computers.

The crucial component in response to automation that Gates does not mention is the Universal Basic Income (UBI). UBI will ensure that those who lose their jobs to robots will have a flexible cash grant that could be used for training, education, or to pursue whatever the individual’s passion may be.

There is a legitimate worry that the companies that own the robots will accumulate most of the wealth, and the rest will be left behind. A basic income addresses this automation cliff more effectively than attempting to delay inevitable automation with taxation.

It is possible in the future, humans will be able to scale back their work hours, while still receiving a comparable overall income through UBI because robots would be doing the bulk of humanity’s work. An individual could spend more time on volunteering, entrepreneurship, their family, civic engagement, and creative endeavors.

The greater the dividend humanity receives from robots because of their higher productivity, the larger the basic income can be without disrupting the economy.

Gates and others are stuck in the mindset that humans are meant to spend eight hours a day, five days a week in a traditional work environment. Robots are threatening to upend the system, which should be welcomed as it opens new possibilities for what people can do with their time.

Just because someone receives a wage from a company does not mean they are maximizing their potential for themselves and what they can provide to society. For example, is a single mother doing more for society by working twelve hour shifts, or spending more time raising her child?

As automation intensifies and countries inevitably start to implement basic income, many will continue to work full-time in the traditional system. Others will work part-time. And still more will find different ways to contribute to society. There is a basic human drive to develop one’s self and bring positive change to the world.

Traditional work will not necessarily cultivate each person’s true comparative advantage. The irony is that robots taking more jobs will give us more freedom to choose our best path, if coupled with an unconditional basic income.

Instead of taxing robots, we should tax activities that we want to discourage. For example, activities that harm the environment, such as fossil fuel use, animal agriculture, and resource extraction. Land ownership could also be taxed at a higher level. This could raise the same amount of revenue from wealthy individuals as Gates’ suggested robot tax in order to fund UBI and other government services, without discouraging the positive good of robotic development.

The dramatic expansion of automated jobs is going to remake the economic order and will require governments around the world to respond. The biggest mistake will be fighting this change and attempting to preserve the same system we have now, instead of using the opportunity to drastically improve it.

Image: Red Maxwell, Flickr, Ted Talk: 2009.

Tyler Prochazka

About Tyler Prochazka

Tyler Prochazka has written 66 articles.

Tyler Prochazka is a Fulbright scholar completing his Master's in Asia Pacific Studies at National Chengchi University in Taiwan. He is the features editor of Basic Income News and a coordinator for UBI Taiwan. Tyler launched the first Asia-Pacific basic income conference in 2017. Support my work with UBI Taiwan: https://www.patreon.com/typro Facebook.com/TaiwanUBI @typro

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15 comments

  • John Burns

    Taxing Robots is difficult to do and quantify. A Universal Basic Income give to all without question, is the better and simpler solution. It could be funded by Land Valuation Taxation, reducing or eliminating Income Tax.

  • Pravin varma

    why do you think that this thought “There is a legitimate worry that the companies that own the robots will accumulate most of the wealth, and the rest will be left behind.” is reasonable and valid?
    how are the robot owners going to make their money? by selling the output of their robots to the rest of us plebs, i presume? if these alleged plutocrats to be decide not to share their bounty with us (i.e keep all the goodies to themselves), we end up exactly where we are today – a few super rich people and the rest of us still having needs to be satisfied -ergo producing the jobs we have today.
    it doesnt make the case for UBI . current progressive taxation is just fine. unless you think UBI is necessary TODAY

  • Kalid Knight

    I think Bill Gates is more correct than the author is. If Canada was to institute a UBI it would increase costs to the government immensely to clear all those cheques. Way more tax revenue is needed. If corporations can automate and let the workers go, their profits go up incredibly, and, because of trade agreements, can and will move their operation to a low/no tax country. So that revenue is gone for the government. Well, we can tax rich people then, right? Not really, as the phenomenally rich are easily moved elsewhere on the planet where personal tax rates are low. Usually those countries have low prices on everything also, so those very rich can move and live like Gods. OK. So who else can be taxed to pay all the non workers? THAT is the question.

    • Karel

      It is easy. I think it would not increase costs of government, but vice versa. Imagine: All company subsidies and unemployment benefits and social security payments (so diverse and injust) could be scrapped and we have the money for UBI without raising taxes. Second step: scrap the individual income tax (not corporate income tax) and sales/VAT tax. Tax the energy and raw materials instead. This would increase activity. We would be able to lay off at least half of state bureaucracy and free people to do what they are creative at. To tax the rich more than middle class or poor: simply tax housing space and land over a certain minimum amount per person. Really easy to create a prosperous society.

  • John

    Basic income is an example of how the elite are Very out of touch. You think were going to accept a world where we have no chance to get ahead and are given the bare minumum to survive on? No way! We will fight before that! Im not going to sit back and watch a select few live a life of luxuary exploitong the resorces of our country while my people suffer to make ends meet.

  • I’m glad you mentioned animal agriculture, mining and fossil fuel consumption as undesiderable activities that should be taxed more. I completely agree with you.

  • Luke Jackson

    I think the point of taxing robots is to get another source of income that would be used to support a UBI, cost is still a giant factor in giving everybody a living wage then take into account that when robots and AI do start taking peoples jobs thats less income tax people are paying into the system.

    • What you tax you discourage, and you slow it down. We don’t want to take robots. We want them to come fast. We should tax the use of resources, the spread of pollution, and things like that.

  • Pat Seynaeve

    The difficulty to finance a UBI is because rich people and multinationals dan’t pay their fair taxes. That’s the reason we have to search to alternatives and while we discuss our different visions, they are laughing with us.
    The only way to force them is by international law, by the UN, Unesco, UNDP, etc
    So let’s start up a worldwide universal basic income by a international organisation like Unesco or UNDP and give it first to the developing countries where people suffer to be slaves. That way slavery and exploitation and structural poverty can be solved and a transition to fair trade will start up automatically.
    Bit by bit the wages can be increased and more regions can joined the global basic income system, till everybody can live at the same level of wellness.
    A big part of the profits of the global economic and financial activities can finance a basic income to give all people everywhere their rights to have a descent life.

    • I’d really love to know how a UBI can be PAID FOR, either at national level, or globally. Without that explanation, it’s just a lovely fluffy Utopian idea. Surely no nation has introduced a full UBI, paid from by taxation, before of the ridiculously high costs that would be involved, and a worldwide UBI would surely be harder to create than a national one – as it would require many countries to cooperate to set it up. For a conventional market-capitalist nation to seriously consider UBI, there has to be a path from whatever existing income tax and social security systems that nation has at present, all the way to UBI, that doesn’t involve making complex changes to international company law, or significantly raising taxes. I mean what I say – I would genuinely love someone to show the mathematical details, reliably and competently, with no hand waving. If you think you can do it globally, explain where the “international organisation” raises the money to “start up a worldwide UBI and give it first to developing countries”. Last I heard the international organisations have to beg nations for the money they need to run their international programmes.

      Bill Gates’s proposal to levy a tax per robot – presumably on the individual or company owning said robot – at least tries to scale with the number of robots as it rises over time.

    • Tyler Prochazka

      If we replaced non-medical means tested federal benefits, the US could have a 6,000 yearly UBI. That doesn’t include all of the corporate subsidies, tax loopholes/benefits, state/local programs which could easily put the US at 10,000 per person.

  • Russell Williams

    it would be far more simple to tax the profits of companies that automate than tryig to work out how meany people a pice of equipment would make redundant. because its not just automated production lies we are talking about hear, it call centers operated by computer as well.

    in the UK replace the Minimum income threshold for income tax with with UBI for every citizen.
    but keep it so foreign workers can earn a basic living.

  • Mike van Wyk

    Mr Gates is being facetious in his suggestion of taxing robots as a state would tax citizens. Now that he has reached his golden retirement, as one of the wealthiest persons on Earth – it is callous of him to make such a suggestion. Much of Mr Gate’s wealth stems from the earlier industrial use of crude robotics – ie manufacture of PC boards, etc. Should his state have suggested taxing automation during the early stages of building Microsoft – he would not have close to the level of wealth his leveraged from automation over the years. I do not despise Mr Gates having such incredible wealth and he and his company have developed most of the technology we take fore-granted today – the world would be a poor place without these useful things. However, I do not think he should offer nonsensical solutions to a very serious global discussion – that is not applying mind to the problem.
    Automation should be embraced, for if it is applied correctly, it will free people from drudgery of mundane dehumanising jobs and importantly, bring down the cost of production. The only part the state has in this scenario is to ensure that automation is advanced for the benefit of all citizens, not just those that own the technology.
    As basic consumer products become relatively cheaper, the cost of implementing UBI will be less reliant on taxes. Automation will allow humans to finally utilise their finest qualities – expressing themselves creatively in thought and deed (as Mr Gates has done in his life time) and provide people real freedom of choice – which does not exist today. Choice of what work they will do, how long they will work, when they will work and how they will direct their lives fruitfully.
    For UBI to work, it must be applied fairly for the benefit of all of society – rich and poor alike.
    Mr Gates should take a lesson from MMT (Modern Monetary Theory) – taxes are there for only two reasons:
    1) to create a need for a sovereign currency (fait money – which is a sovereign IOU – which has a denomination of value created by decree);
    2) to adjust money flow and behaviour – (to change behaviour and guarantee the flow of money within a economy).
    Sovereign states issuing their own legal tender do no not need to rely on taxes to fund UBI – the funds can be created by the treasury within reason, for the public purpose – I say within reason, because excesses fiscal stimulation, not for good public purpose, can lead to hyper-inflation. (Zimbabwe is a classic example).
    UBI in some form, will be incorporated globally for two reasons:
    1) it is a simple and practical way to ensure political stability and peace;
    2) it guarantees movement of money from the base of the economy, effectively supporting the movement of money throughout the economy – not just the upper echelons of the economy – as was the case with recent QE stimulation of various economies post 2008.
    The global implementation of a common UBI system will evolve from inter-state agreements at a global level, in conjunction with existing controlling bodies such as the IMF, World Bank and other fiscal organisations. Which will see the development of multilateral inter-state agreements that incorporate UBI as a common stabilising base to all economies – (I emphasise all economies). In simple terms it would entail the creation of a new global economic policy and social law, which is acceptable for all countries. This new economic order will promote a level of fiscal support to every economy with an agreed level of UBI. Such a global economic system will bring in an new era of harmony, stability and hopefully lasting peace.
    I believe that the current interest in UBI globally is not by accident – but by the common understanding that the current global economic framework has broken down and is in danger of causing massive instability worldwide. Fortunately technology and financial systems are now developed to an extent that a common global solution to incorporate a more fair distributive system is within grasp. All that is now required, is the political will to act.
    As money and economics is a social construct – so are the solutions to the short-comings in the present system.
    UBI offers a modern, very simple and practical construct, that can bring into reality a much more fair and equitable society at peace with itself. I challenge all governments to take a serious look at UBI and I salute all governments that are currently taking the first steps in the right direction. It is encouraging to see UBI being discussed more frequently in global economic forums such as the World Economic Forum in Davos. Let us rally around UBI and develop the discourse further – I recommend that people call your local government office and ask them what they doing about UBI – get it on the agenda in every village, town, city and province – that way change will come sooner than we imaged.

  • Leandro C.

    Universal basic income will have as a result the disappearance of the middle class, and the creation of poorer people because they do not have these social promotion mechanisms as a profession.

    • Mike van Wyk

      The ‘weekend’ was first established formally by Henry Ford. We take weekends today as normality – or a right. However the weekend was final established as recently as 1938. Until then most people work most days excluding some time off on Sunday. Eventually a right to weekends was past into labour law. This has not however stopped people choosing to work over weekends – mostly because they can earn a higher hourly rate.

      The human condition is such that adaptation and striving for better are written into our genes – we always want more! Therefore I gently disagree with your comment – I believe UBI will do exactly the opposite – it will propel more people to higher education, richer life experience and higher paid work. UBI does not discourage work it provides people with the power to say no to poorly paid work or work that can be mechanised.

      People will have the means to take more risk – so starting a business will not be as challenging and stressful as is presently the case – therefore I see many more young folk with dreams and vision that ordinarily would not have the carry funding to survive the launch phase – therefore I predict that many more people will become self employed and more small businesses will succeed because less stress will be placed on raising survival wages.
      That would propel more people than ever to enter the middle classes.

      For the above reasons I see UBI as a positive force in driving wealth creation – certainly all the pilots have shown a very positive increase in small business activity.

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