The Next Economy
Would Bill Gates’ Robot Tax Help Create Human Jobs?

As a humanist, Bill Gates has been on something of a roll. Recently, he launched Breakthrough Energy Ventures, a $1 billion fund for startups working on promising sustainable energy solutions. This isn’t actually that much money compared to what’s needed for a game-changing solution, but Breakthrough Energy will be only part of the funding picture, and $1 billion is undoubtedly a real boost.

A prolific philanthropist, Gates is perhaps making up for the years when the Bill and Melinda Gates Foundation held $1.4 billion in fossil fuel investments, a commitment the Foundation has since walked back by 85 percent, including complete divestment from ExxonMobil and BP. The Foundation’s primary focus has been global health initiatives, but lately Gates has been taking a different tack, speaking out on an issue that, given his tech mastery, is close to his heart: Artificial Intelligence and the world of work.

His idea has a socialist undertone, which is surprising coming from the richest man on Earth. Gates made his fortune through the full-blown capitalist thrust of the computer revolution. The Microsoft mission under Gates was to put a computer on every desk and in every home. If the coming rise of artificially intelligent robots, which will replace human workers, is a logical result of the Microsoft mission coming to fruition, then Gates’ new resolve is the sign of a man willing to evaluate the implications of his mark on the world. But is Gates’ idea even viable, and is it the right thing to do in order to spur innovation?

In a recent interview with Quartz, Gates essentially says governments should tax robot workers and use the money to turn around and train people to do work we sorely need, work that requires empathy, such as “reaching out to the elderly” and “helping kids with special needs.” Who could argue with that?

Further, he says, “At a time when people are saying that the arrival of that robot is a net loss because of [worker] displacement, you ought to be willing to raise the tax level and even slow down the speed of that adoption somewhat to figure out, ‘OK, what about the communities where this has a particularly big impact? Which transition programs have worked and what type of funding do those require?’”

This implies using taxes to purposefully slow down the adoption of automation. Since Gates made this statement, a number of authors for prominent publications, including Fortune and Bloomberg, have spoken up in opposition.

Both Fortune and Bloomberg argue that a robot tax would indeed slow down innovation and job creation. Automation doesn’t have to replace humans – it could complement human work by creating new jobs.

In some cases, automation has already been of real assistance. The University of Illinois at Chicago identifies five advances in medical robotics, including the remote presence robot, which allows doctors to “beam” themselves from any location into a patient’s room. Melanoma-detecting machines help eliminate human error in detecting cancer, while the customizable Bestic robot arm feeds you when you’re incapable of feeding yourself. According to UIC, to provide animal therapy to children, robotic baby seals “can learn their own names, blink, and express different moods depending on how the child interacts with them.”

Startups are also looking into using Artificial Intelligence for emergency management. The Qatar Computing Research Institute is using machine learning to automatically identify tweets related to particular crises.

For Gates’ own Breakthrough Energy Ventures, his idea could very well backfire. Say a startup discovers the most efficient and convenient way to store energy and invents a technology for this purpose. But manufacturing the storage units is extremely skilled labor that requires inhuman precision and methodical repetition, so the factory requires AI due to the complexity of the operation; for the storage solution to be economically viable, the startup would need to use robots for manufacturing. A tax on robots would make manufacturing too costly for the startup, and would hamper widespread adoption of efficient energy storage because the units would cost too much. Taxes on robot workers would result in an indirect tax paid by consumers at the point of sale.

Given what we know about Gates’ opinion from the Quartz interview, he might say governments could suspend robot taxes on startups manufacturing sustainable energy solutions for the greater good. But this would go against US core tax concepts, particularly the Canon of Equality, which states that “everyone should bear their fair share of the tax burden.” This share is supposed to be proportionate to what an entity earns compared to other entities’ earnings. A startup with a great sustainable energy solution would stand to make a ton of money. The Canon of Equality says it should be taxed accordingly.

Also, taxing robots may require a strange proviso, wherein robots qualify as citizens. Obviously that’s not what Gates is intending, but it could easily be an offshoot of his idea. If tax law doesn’t change to specifically address robots, the government would not be able to get away with levying taxes on them as anything other than property.

There are several possible solutions (besides Gates’) to the idea that AI robots will able to take over jobs. One is to provide wage subsidies for low-income workers. This would give businesses incentive to employ humans over robots, because employing a human would effectively cost less. Subsidies would come from higher income taxes on the wealthy or from a value-added tax, which is a tax on goods once a company produces them, and when the consumer buys them.

Another solution may be to redistribute the wealth that robots help create. This could come in the form of a sovereign wealth fund. Essentially, the government would tax income highly concentrated in the hands of the rich, such as rental income and capital gains income. Then, government would invest this money in stocks, bonds and real estate, redistributing the profits to people, particularly those displaced by robots.

All of the above solutions require an acknowledgement of the problem and a helping hand from government to displaced workers. In that sense, a capitalist critic might label these solutions as socialist. From a capitalist viewpoint, displaced workers should apply themselves toward learning new skills.

When it comes to AI and human jobs, the Washington Post reports several statistics:

• According to the Organization for Economic Cooperation and Development, robots could take 9 percent of jobs within the next two decades
• According to researchers from Oxford University, that number looks more like 47 percent

No one is completely sure what this will look like, but the reality is, we’re going to lose jobs, and Bill Gates’ solution may not necessarily be the right one. But in the coming decades, we will need to create brand new kinds of jobs, and we’ll need to take the money robots make and somehow use it to prop up society.