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Wednesday, April 5, 2017

Taxing Robots Does Not Compute

Apparently machines are robbing the government of robbing employees of their income.

Bill Gates was on the news recently, and said that by using robots for some work tasks, we are denying the government the income tax it would otherwise be taking from human employees. To fix this “problem,” Gates suggested we impose an income tax on these robots.

The idea, of course, is that technology is somehow denying the government revenue and thereby disrupting the economy. But as we’ve seen so many times, if we tax something, we end up having less of the thing in question. If we tax the labor of robots, we will end up with fewer robots.

Perhaps that sounds like a good idea to Bill Gates, but it would be terrible for the rest of us. Once we realize that “robot” really just means “automation” and “machine,” then we start to see that having fewer machines would make all our lives more difficult: decreasing productivity, taking us away from jobs that machines have freed us to do, and forcing us to take jobs we do not like or are not good at.

Maybe Gates would rethink his position if he saw that his own creations – as well as his refrigerator, his washing machine, his car, etc. – would be taxed and, as a result, fall in production.

Watch the full video below or on YouTube, along with our other episodes, or listen to the podcast here.

  • Dr. Antony Davies is an Associate professor of Economics at Duquesne University, and co-host of the podcast, Words & Numbers.

  • James R. Harrigan is a Senior Editor at the American Institute for Economic Research. He is also co-host of the Words & Numbers podcast.