Making the tax burden of robot usage equal to the tax burden of human labour.
Instead of introducing the “robot taxes”, we need to eradicate the “human taxes”. Else essentially all kinds of automation are heavily tax-subsidised by governments.
Publicly editable Google Doc with this text is available here for cases where you want to easily see the updates (using history), or ask questions, to comment, or to add suggestions.
Roland Pihlakas, 18. May 2018
Initially posted among my other ideas to the Solving the AI Race challenge.
Abstract.
There have been proposals to introduce robot taxes. I would propose something slightly different as a potentially much better alternative. Instead of introducing the “robot taxes”, we need to eradicate the “human taxes”.
The main point of my proposal is that the tax burden of technology is currently lower than the tax burden of human resources and this will have to change sooner or later. By “technology” I mean all of the following: software, robots, even cyborgs, all other technological solutions, be it a trained bird on a branch — it makes no difference from the perspective of this proposed solution and no registration or classification will be necessary. Therefore this solution can not be bypassed by “legally correct” tricks for avoiding the taxes.
The current tax system has brought about the unwanted and unforeseen side effect, that not only are people displaced by (tax-free) robots in the cases when it benefits the economy, or when it benefits the quality of the manufacturing process to price ratio, but also in the cases, where the only beneficiary is the owner of the robots and no one else.
This is a paradox that I will explain in more detail and aim to solve in the following article. The proposed solution would be a taxing principle quite different from the one currently in use. However, it would sustain the national tax gains, would not require additional bureaucracy, will not hinder economic growth, yet warrant that people will be replaced by robots in such cases only where it boosts the economy and leads to a better quality to price ratio. Since by nature this principle is very simple, there are no clever hacks around it that could be utilised by the owners of the robots.
Analysis.
Instead of taxing robot usage I would propose gradually increasing VAT (value added tax) while gradually removing employee taxes as separate taxes at the same time. It might even improve the economic or human life quality status of countries that adopt such an approach. Note that according to my proposal there would be no separate tax for AI-intensive companies (like proposed in other places), since the latter would be quite difficult to implement. This way robots and AI will be developed a bit more slowly — only where it really benefits the economy.
I claim that robots are currently used not necessarily because they produce higher quality work, but because they are simply cheaper for their owners since they incur reduced tax burden. Essentially all kinds of automation are heavily tax-subsidised by governments.
Incentivising the owners to keep human labour instead of replacing humans with robots would actually improve the nation’s economic productivity — at least in some markets — currently, the machines DO NOT provide real economic growth to the society they operate in. This explains why the economic growth seems to have stalled regardless of all the technological “innovation”.
Unfortunately, it would be difficult to introduce a robot tax, since the use of robots can always be hidden or disputed. Is a software robot also a robot? Where can the line be drawn between a robot and a human who is more or less using the help of a machine, thereby still taking away work from 10 other humans? I am not saying that the robot tax cannot be introduced at all, I am saying that this approach alone would be quite a complicated solution.
One alternative would be removing the social and income taxes, and then increasing the VAT by the corresponding amount (for all kinds of companies). The social tax, income tax, and potentially other workforce taxes have turned out to be quite a sorry invention, considering how they have indirectly motivated the current trends in replacing humans with machines.
Increasing the VAT would at once remove the concern that companies would start hiding their robot workforce. So the companies who provide worse service by cheaper robotic workforce would not have this tax-based competitive advantage anymore. Also such robotic workforce could not be relocated to tax havens, since there would still be comparable increases in import taxes.
Currently the robots may well perform their work worse than humans. But because they incur less tax burden than human workforce — the company does not have to pay social tax and other workforce taxes, the robots are cheaper. There is only the cost of acquiring the robot and then the energy use expenses. So the companies using the robots may have a somewhat dishonest advantage before the companies employing humans. Therefore at least part of the current progress in the wide adoption of machine workforce is unexpectedly due to tax savings, and not due to better service, nor due to the fact that the machines are generally cheaper.
The companies employing the robots — or more honestly — machines in general, should win their competitive edge only through better service — while keeping the financial burden at the same level, or at least through the comparable-quality service at a lower cost. Then the whole world will win from these developments. The society will gain from it and there will be a real economic growth (which can be redistributed by various novel schemes, like for example UBI, if necessary). Without real improvement in the service at the same cost level there would not be real increase in available resources. Instead, currently the availability of resources in the society would actually be diminishing. In the current case the novel social resource redistribution schemes cannot be possible and social inequality will only increase — since only the owners and decision makers will have the benefits.
Rebuttal of counter-arguments.
It has been said that using VAT would be “regressive” since it affects poor people first. But this counterargument should be considered with more precision. Increasing VAT may be problematic when it is done alone. But the current proposal proposes increasing VAT, while at the same time reducing workforce taxes. The end result is quite progressive:
1) Human workforce will be valued higher, therefore poor people:
— get a higher salary,
— and lose less jobs.
2) It is possible to provide poor people with VAT reductions — similarly to how currently certain products have a reduced VAT rate — we could provide a reduced VAT rate to poor consumers.
3) Rich people who do not spend all their income via VAT-taxed consumption can be taxed using separate and additional schemes, which are still more practical than taxing the “robots”.
I would like to provide a somewhat surprising analogy by comparing the use of robots with slave-keeping.
- In the case of slave-keeping, there are also gains from reducing or avoiding the workforce costs, since the owner only has to carry the acquiring and “maintenance” costs.
- The second common part is that there will be many people who do not have normal income nor normal work.
- The third commonality is that the actual quality of the service may be reduced, without reductions in the competitiveness of the service.
- The only difference is that the owners of the robot company do not actively abuse anyone, instead they do it kind of passively — because they still expect income and profit from the abused parties — from the society who is losing income at the same time.
- Now we have a similar situation that countries do not want to limit the innovation and robot use, because they are afraid of losing their competitive edge.
But a long time ago the same argument was used in favour of slave-keeping… Well, there was a lot of turmoil and blood spilt because of that, before the slave-keeping was ultimately abolished. Similar scenarios may now unfold with the robots and machines in general, unless the policy makers grok and foresee this in a timely manner.
See also.
- Robotite maksustamise teema teesid. (In Estonian)
Short summary of the theses presented in the current essay, in Estonian. - “Project: Legal accountability in AI-based robot-agents’ user interfaces.”
The central subject of this project is legal accountability in artificial intelligence. We are going to show who can justifiably and fairly be made responsible for the actions of artificial agents, and how can whitelisting help both artificial intelligence developers and legislators in making sure that we will have as few surprises as possible. In other words, the project will research the possible ways to control and limit the agents’ actions and learning from a legal point of view, by utilising specialised, humanly comprehensible user interfaces, resulting in clearer distinctions of accountability between the manufacturers, owners, and operators. - What happens when autonomous robots are not regulated or on the contrary, qualify as subjects of law?
Proposals have been made, that in order to have a worthwhile dialogue on the subject of regulating autonomous agents, we should first determine what are the problems that need to be solved via these regulations. - What can happen, when we don’t have a clue why a somewhat autonomous gadget does what it does — my analysis of the Gatwick Airport drone incident.
All in all, the story illustrates the notion, that when considered in a broader sense, the problem of identifying the owners of autonomous devices is no longer resolvable with robust methods. What is needed, is the infrastructure for enforcing the principles already found in existing laws also on autonomous devices, and the infrastructure that enables justified accountability of various persons related to the robot-agent (either manufacturers, owners, or users).
