In case you missed it, South Korea has introduced what is being called the world's first tax on robots amid fears that machines will replace human workers, leading to mass unemployment. Of course, one can't actually tax robots so what they're actually doing is changing the corporate tax code to provide disincentives for capital investments in technology. Genius plan if we understand it correctly. Per The Korea Times:
Amid worldwide debate on the use of robots for work and possible consequent unemployment issues, the government made a first move that may help slow down automation in industries, according to sources, Monday.
In its recently announced tax law revision plan, the Moon Jae-in administration said it will downsize the tax deduction benefits that previous governments provided to enterprises for infrastructure investment aimed at boosting productivity.
Currently, enterprises that have invested in industry automation equipment are eligible for a corporate tax deduction. Companies can have part of their corporate tax ? between 3 percent and 7 percent of the investment ? deducted under the policy, with the rate varying by the size of their business.
This sunset policy was scheduled to expire at the end of the year. But the government suggested extending it to the end of 2019 while decreasing the deduction rate by up to 2 percentage points.
Let that sink in for a moment...South Korea is literally looking to change its tax code to deter corporations from making capital investments "aimed at boosting productivity."
Of course, it's not just financially challenged politicians who have managed to convince themselves that taxing productivity gains is a great idea...Bill Gates is fully onboard as well.
Microsoft founder Bill Gates is one of the well-known advocates of a robot tax. In an interview this February, he said governments should levy a tax on the use of robots in a goal to fund retraining of those who lose jobs and to slowdown automation.
"For a human worker who does $50,000 worth of work in a factory, the income is taxed," Gates said. "If a robot comes in to do the same thing, you'd think that we'd tax the robot at a similar level."
He also stressed that there are still many jobs that need human hands and minds and thus cannot be properly replaced by robots.
"What the world wants is to take this opportunity to make all the goods and services we have today, and free up labor, let us do a better job of reaching out to the elderly, having smaller class sizes, helping kids with special needs, all of those are things where human empathy and understanding are still very unique," he said. "We still deal with an immense shortage of people to help out there."
Just out of curiosity, who does Bill Gates think is actually on the hook for those tax bills sent to corporations? If the U.S. government suddenly decided to raise Microsoft's tax rate by 40% would the company simply absorb the earnings hit and move on as if nothing happened? Or, would they pass those additional costs on to their customers to save their share price from tanking?
You see, Bill, corporations don't really pay taxes. Yes, we know that in a literal sense their names are on the tax returns but they're simply pass through entities that collect money from end consumers and send it to various taxing authorities.
So, as usual, the only people who really get hurt by these ridiculously misinformed policies are the consumers who will have to overpay for everything from iphones to automobiles.
And here's the real kicker, Bill, your robot tax is massively regressive as the poorest people are the ones who will be hit hardest by what is effectively a consumption tax.
Meanwhile, this all ignores the far more dire long-term consequences of deterring technological innovation.
As we've pointed out before, John Maynard Keynes made similar predictions about technology leading to mass unemployment back in the 1930s...
"We are being afflicted with a new disease of which some readers may not have heard the name, but of which they will hear a great deal in the years to come—namely, technological unemployment" - Keynes, 1930
...Yet, here we are some 85 years later sitting on near full employment (well, if you ignore the ~95 million people just 'don't want' a job) despite coming quite a long way since the days of primitive single-engine prop planes and steam engines. Go figure...