Bill Gates’ latest idea to tax robots aims to solve a problem that does not exist: empirical analysis of economic data and forecasts shows that automation and the use of robots create new jobs by increasing productivity. This is in line with the historical experience of technological revolutions, last seen when computers and software automated the business world. To tax production tools instead of their profits would have a negative impact on competitiveness and employment. This is presumably why the European Parliament rejected the idea to impose a robot tax and the International Federation of Robotics strongly agrees with that decision.
According to the McKinsey Global Institute, more than 90% of jobs will not be fully automatable in the future. Instead, robots and humans will work together. The positive impact that the increased productivity of robots has on employment can already be seen in the most advanced industrial nations. The US automotive industry, for instance, installed more than 60,000 industrial robots between 2010 and 2015. During this same period, the number of employees in the US automotive sector increased by 230,000. The same trends can be seen in the most advanced economies in Europe and Asia. Moreover, recent research by the OECD on the future of productivity shows: companies that employ technological innovation effectively are up to 10 times more productive than those that do not. This has a positive impact on competitiveness.
Profits, not the means of making them, should be taxed
A robot tax would make these much-needed investments in technology more expensive for companies. “Profits, not the means of making them, should be taxed”, says Joe Gemma, President of the International Federation of Robotics. Research shows that automation actually results in a positive tax balance for social systems. Repetitive or dangerous tasks are replaced by industrial robots, leading to the creation of new, safer, higher-skilled and higher-income jobs that increase pension contributions.
Avoid bureaucracy and use international standards
The IFR strongly supports the idea of greater cooperation in robotics between the public and private sectors. They must adapt education and training systems for example, so that current and future workers can reap the benefits of robotics. Yet, it is important to avoid bureaucracy which does not deliver value.
The IFR believes that a European agency for robotics and artificial intelligence would create such bureaucratic overhead. The civil law issues related to robotics are already addressed by existing legislation. Product liability and safety are covered by global standards and EU directives such as the European machinery directive. At present, there is no need for further development or the establishment of a separate category for robotics. The current process at European level needs to take into account what has already been standardised: the world’s largest International Organization for Standardization ISO, has established a special Technical Committee for robotics – the ISO/TC 299. Technical experts from American, Asian and European countries have developed international robot safety standards under European harmonisation. All countries concerned are involved in these activities. The sector has a major interest in developing standards at the global level rather than looking only at European or national activities. “The IFR is convinced that regulations on robotics must be developed in close collaboration amongst representatives of the public sector, robotics manufacturers, robot users and developers, as well as researchers”, says Joe Gemma.
International Federation of Robotics
www.ifr.org
The focus on robotics on the job market and in relation to that to discuss what would be the right way to tax is adequate when you focus on manufacturing.
For the economy of a state or a union like the EU it makes absolute sense to promote technological advances as this will benefit those states and unions like the EU to keep a larger share of employment in their countries. What the impact on medium and weak economies that benefit from making production in their countries due to low salaries is another question!
The question about how to tax in the future is a valid question when you analyze the impact of AI in the industrial, but much more in the administrative and services industries! If I look as an example into a German car manufacturing site the impact of further increases of efficiency due to AI is neglectable as there are not too many jobs left! The requirement on the skills of those having jobs will continue to increase and demands the pushing of education systems to provide those high skill people!
The real impact of AI in the job market is in the none industrial fields! As AI today has very deep pockets to promote its advances and as some companies like Amazon, Google and Facebook every improvement to their AIs leads to better products and services they offer and in consequence is a license to print money! Added to that dramatic improvements in many areas of science and let me single out the semiconductor and their efforts to create AI devices, will make the AI a tool in any industries and jobs. here is where, depending of the time frame you apply, 70% to 90% of the jobs, even high skilled jobs like lawyers will see dramatic changes impacting this jobs.
So those countries in the lead in the development, production and adoption will benefit from investing in keeping a lead in those industries! But if I take Germany as an example of a state that leads in many fields, they have to invest and promote technology and its deployment to keep their lead! But as state finances, social systems and the market of consumers do finance by taxing work and profits. If the number of jobs decreases dramatically as I believe can be expected from the impact of AI, the income of finance resources cannot be covered from the traditional tax of work and profits! Where should the consumers income come from that results in consumption, where should they get their income from?
Leading states have to time the implementation of new taxation systems parallel to that of the impact of AI in the job market! But what is with those billions of people that do not live in those states leading? What is the impact of those not leading countries on their ability to import goods from those leading countries?
The challenge for the governments worldwide is to find a path to a future where AI and other technologies fundamentally change the job market. The EU, and Angela Merkel as an important person in the EU, have to balance the domestic industries and the economic future of less developed countries to fight the massive Immigration problem! So the path to the future requires a very complex and balanced path between technology and global development! No place for simplistic messages about topics as this article does!