Should Robots Be Taxed?


 Kevin F. Clune, CLFP

Robots are taking human jobs but should they be taxed just as a human who does the same work? When asked this question in a recent interview, Bill Gates said he believes that “Governments should tax companies’ use of them”.

Gates explained that a robot tax could finance jobs taking care of elderly people or working with kids in schools, for which needs are unmet and to which humans are particularly well suited. The writer reacted, saying, “It’s a striking position from the world’s richest man and a self-described techno-optimist who co-founded Microsoft, one of the leading players in artificial-intelligence technology.”

How does this question relate to the equipment finance industry?

Since a robot is a capital investment just as a computer or a fork lift, the leasing business would be affected by such a Government tax policy. According to the old adage that when something is taxed, you get less of it, applies to this situation also. The result would be less investment in assets that enable a company to be more productive and more profitable.

While there were many articles written in response to Mr. Gates’ ideas, there were a few notable questions and observations in Bloomberg News

  1. “The main argument against taxing the robots is that it might impede innovation”, (and by extension, investment). “Taxing new innovation might make that slowdown worse.”
  2. “How does one differentiate between new technology that complements humans and new technology that replaces them?”
  3. “Investments in robots can make human workers more productive rather than expendable; taxing them could leave the employees affected worse off.”

An article in The Economist probably sums it up best.

“Economists typically advise against taxing such things (as robotic equipment), which allow an economy to produce more. Taxation that deters investment is thought to make people poorer without raising much money. In some distant future, robots with their own consciousnesses, nest-eggs and accountants might pay income taxes like the rest of us…presumably with as much enthusiasm.”

In the meantime, I hope we have dodged this bullet. Please contact us if you need to finance a robot.

Kevin F. Clune, CLFP
Clune & Company LC