Wednesday, March 08, 2017

Why Taxing Robots is Stupid

Much like Ben Carson delved into a world he didn't know what he was talking about where he claimed slaves were immigrants, Bill Gates, like many IT moguls, decided to stupidly wander into a world he knows nothing about - economics.  In a video Gates advocated "taxing robots" as a means to assuage people over their irrational concern that robots are going to replace them and steal their jobs.  This tax would be used to finance charitable, social work, and other humane type jobs, such as helping the elderly, the poor, and the children, and would create the jobs needed to replace the ones lost to the robots.  But while the idea seems nice and there are some elements that could work, the idea is childlike, naive, and ignorant as (like most idealistic leftist poppycock) it ignores real world economics.

First, how would you tax the robots?  Would it be a sales tax on robots purchased?  Would it be on their production?  Would there be a stamp tax?  I certainly don't put it past the governments (state, federal and local) to choose the worst (or all) of these means by which to tax robots, but if you thought about it there's already a tax in existence to tax robots.

The corporate income tax.

If a robot replaces human labor for a fraction of the cost, then the labor expense of corporations would go away.  These DRAMATICALLY increased profits would be taxed at the 40% statutory rate in the US, resulting in a boon to state and federal corporate tax revenues.  In other words, the tax to tax robots already exists.

But there are two subset problems arising from this fact.

1.  Since the robot tax is already in place, that means NOTHING has to be done. Normally, a logical person would say, "Great!  The problem will solve itself!  No work required on our end.  Corporate income tax revenue just goes up for the government and they take those proceeds and create some make work jobs with them!"  But politicians and aging virtue signalers (like Mr. Gates) need to "do something" to show they care, they're good people, and to win votes.  Why, they just can't let a problem solve itself!  They need da feelz and da gimmedatz.  So I'm afraid an increase in the corporate tax rate or (worse) and additional tax (resulting in additional costs and burden to the system) on robots would be unnecessarily implemented.

2.  I don't know if you noticed this, but (especially) leftist corporations like Google and Apple like to ship their taxes overseas using corporate inversions and other tax loopholes while hypocritically claiming to be good "corporate socially responsible citizens."  And I'm sure if I looked into Mr. Gates personal taxes and Microsoft's, they're actively engaged in hiring tax accountants and lawyers to lower their tax bills as well.  Unless you were to effectively close these loopholes to ensure increased corporate profits due to the elimination of labor costs could be taxed, these virtue signaling lefty corps (as the rest of them) will merely squirrel away their profits offshore resulting in no funds to create new-make-work-warm-fuzzy-jobs according to Gate's plan.

A second simple question I have is "what if China doesn't implement a robot tax?"  This question is preciously moot because the robot argument is being precisely paralleled in China in terms of our, oops, sorry their manufacturing and labor force, but humor me anyway.

What if China decides not to tax their robots?

Assuming the US adds an ADDITIONAL robot tax beyond letting the corporate tax rate capture increased profits OR they increase corporate taxes for virtue signaling reasons, corporations will simply do what they've been doing since Clinton.  They'll ship their manufacturing facilities and robots overseas where they'll not only be able to keep more profits, but enjoy lower production costs as well.  The trade balance will worsen (for the US anyway) and no free happy warm fuzzy wuzzy money for make-work-touchy-feely-jobs will exist for Americans.

The point is any country willing not to tax their corporations or robots will have a HUGE manufacturing edge over the United States.  But, as I eluded to before, this argument is moot because nothing is physically produced in the US anyway.

And finally, BGI or "basic guaranteed income."

I do like Bill Gate's (or whoever really came up with it) idea because there is a seed of truth to it.  Robots would free up American labor to pursue easier, loftier, and more noble professions.  The only problem with this is that this runs right into the face of human nature.  Humans don't want to work with the elderly, help with the children, or do whatever charity work.  They don't want to work period.  This is why the left is arguing for a BGI or basic guaranteed income and NOT work programs.

If you haven't noticed this in the past 60 years, then you truly do have your head in the sand.  Humans, and especially Americans, do not want to work.  It is their nature, it is in their genetics, the majority of humans prefer to be lazy and collect a check.  Ever since the Great Society multiple generations and millions of people have chosen to sit on their asses collecting a government check when they could have easily gone out and volunteered at a hospital, donated time to a school, or offered their idle labor to some other such noble cause.  And while Bill Gates dreams of chocolate rivers, lollipop trees, and an army of people recently-laid-off-by-robots working non-profit jobs to help out society, the truth is these people would rather sit on their asses and play XBox and watch Cowboy Bebop.

Now the argument can and will be made that these new jobs would be JOBS.  They would be financed by new government monies arising from the Robot Tax, and if you wanted the money you would have to apply and work.  And in a normal, evil racist sexist Ward Cleaver 1950's world of American logic, yes, that would be true.

But understand the people's wishes trump logic, reality, and reason.  And the left is not arguing for make work jobs.  They're arguing for BASIC GUARANTEED INCOME, which is indeed a gubmit check to sit on their asses.  And to appease these people in order to get their votes, leftist politicians will NOT require people actually work to get these monies and so the elderly will continue to rot in nursing homes, the children remain un-mentored, and the poor untrained and untended. 

This, sadly, is the main reason why Bill Gate's cute little dream will not work.  It's not the taxation problems.  It's not the international competition from foreign countries problem.  It's the fact Americans are lazy and would rather let their neighbor WWII vet starve and collect a BGI check, because working for a "Robot Tax Public Works Touchy Feely Jobs Program" check would

Alas, if you want to work in this upcoming brave new world, I suggest you take a lesson from the Simpsons:

"The wars of the future will not be fought on the battlefield or at sea. They will be fought in space, or possibly on top of a very tall mountain. In either case, most of the actual fighting will be done by small robots. And as you go forth today remember always your duty is clear: To build and maintain those robots"

Enjoy the decline.
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Anonymous said...

nothing is physically produced in the US anyway

Manufacturing is 12.5 percent of total U.S. GDP

fatmanjudo said...

I find it funny that i have to prove i'm not a robot before commenting on this article. At the turn of the last century, not 2000, the one before that, about 30% of the population worked to produce all the food they ate. Now 3% work to produce much more food. All those farmers went to work in services and manufacturing. If you haven't noticed manufacturing is mainly done by robots. There are entire manufacturing plants with only a few humans working. Now the ex-farmers and ex-manufacturers are going into services. But, the vast majority of services are repetitive and therefore, will be replaced by information science coupled with robotics. Guys like Gates know this. He also knows that the ex farmer, ex manufacturing, ex service people are not just going to choose to sit at home and starve to death. They will eat Gates, before that happens and he is pretty skinny. The government has been expanding its workforce in an attempt to keep people doing something. The tax code, human resources, schools, medicine, and insurance are government sanctioned make work projects for the middle class. They will collapse before the government streamlines those areas of the economy. For the poor, the government already provides a basic income to females and children. Providing everyone with a basic income is the logical solution in a world where human labor has been replaced by technology except for high IQ professions. Don't you see the beauty (irony?) in the success of your god capitalism logically necessitating socialism. Or we can just kill off the useless eaters, but then who would consume all the crap the capitalists produce.

Post Alley Crackpot said...

I for one look forward to our benevolent robot masters, and therefore I say ...


Anonymous said...

It's a shame one even have to explain this.

Anonymous said...

My problem is that most of these "magic robots" the left fantasizes about are named "Manuel" and "Lee". Leftists can only wish we had automation as autonomous as they would like: It's the only world in which most people *could* sit on their asses without enslaving some proportional number of other people to sustain them. Unfortunately, the prosperity of the left is *STILL* built on de-facto slave labor. Their magic robots don't exist. Real robots require engineers to design them, engineers to lay out factory floors, engineers to prototype products. They require people to maintain them - they don't fill their own parts bins or clean their own filters. Real industrial robots still require a lot of highly trained and intelligent human attention to function.

Anonymous said...

Oh, and by the time we really do have magic robots: Things capable of solving problems with intelligence and creativity: They'll want paychecks too, meatbag.

Anonymous said...

ya bill gates knows nothing about economics. idiots .

Anonymous said...

fatmanjudo you understand neither capitalism nor socialism. Run along.

Anonymous said...

The Simpsons, cmon it's nothing more than liberal progressive propaganda,couldn't think of anything else?

David Foster said...

Well, the first issue with such a tax would be 'what is a robot'? Is a CNC machine tool a robot?...I would say definitely so. An ATM machine? An automatic elevator? An office productivity software suite? (what say, Bill?) Can you imaging the level of regulatory maneuvering and litigation that would surround any such attempt to tax robots?

I wrote about Gates' proposal in this post:

Shylock Holmes said...

While I agree that the robot tax would be distortionary and have the effects you talk of, there's a qualified defense of the idea which says that a robot tax would at least help to offset all the many distortionary taxes and regulations we currently have against labor. Payroll tax is the most obvious, and you might arguably put things like mandatory health insurance, health and safety regulation etc in the same category. In other words, we don't have an system that treats the inputs equally at present, but one which penalizes labor relative to robots. Admittedly from a basic econ perspective, you'd rather get rid of these other labor regulations instead. But as long as they're going to exist, I'd rather not have all the distortions be against labor as an input.