With amazing strides being made in the fields of Robotics and Artificial Intelligence (AI), there is the very real possibility of massive social upheaval as more people lose their jobs to more efficient and productive smart machines. Some studies predict job losses of up to 50 percent by 2030, which would not bode well for tax revenue generation and social program sustainability.
A radical solution being proposed by Facebook’s Mark Zuckerberg, Tesla’s Elon Musk and Microsoft founder Bill Gates, among others, is the concept of Universal Basic Income (UBI). Under this concept all Americans would be guaranteed money each month to cover basic necessities, including rent, food and clothing. But advocates of UBI are usually vague about where all this “free” money would come from, a point incessantly hammered by critics.
Yet, a first-of-its-kind solution may be emerging in South Korea: tax the robots and reduce the tax deduction for this type of capital expense. This tax law revision plan anticipates that the government will need more funds for welfare programs as the unemployment rate rises as a result of continued automation.
Critics of such tax plans argue that they would discourage corporate infrastructure investment, restrain innovation, and interfere with the ability of companies to compete in a world that demands better quality goods and services at ever cheaper prices.
On the surface, these arguments sound reasonable. In reality, they are quite dubious.
The loss of tax advantages is not a compelling enough reason to deter continued investment in smart robots. After all, the reasons for their purchase are that they outperform humans, save money, and work continuously with minimal downtime. No company would turn away from these benefits just because a few tax breaks were rescinded, just like consumers did not stop buying cars in the 1980s when they could no longer deduct loan interest from their taxes and, in many states, started paying an annual tax on each vehicle.
Universal Basic Income is now in the mainstream of public discourse, as is the idea of using robots to pay for it. With this funding mechanism, UBI could become more than just a safety net and offer an opportunity for people to live more fulfilling lives and become more entrepreneurial in their career choices without imposing a massive financial burden on the rest of society.
Nathan Muller is Managing Partner of Ascent Solutions Group, which provides marketing and technical support for Telecom and IT clients nationwide. http://ascent-llc.com