Taxing Robots Won’t Help Workers or Create Jobs
New research suggests shifting taxes away from workers toward automation could significantly boost employment. It’s not that clear-cut.
Robots get better tax treatment than workers. So what?
Photographer: Hauke-Christian Dittrich/DPA/AFP via Getty Images
The debate over automation has been overshadowed by more immediate economic problems created by the coronavirus crisis. But when things return to some semblance of normality, it’s sure to crop up again and may well play a role in how a recovery takes shape.
The basic question is whether automation is good or bad for average workers. The latest salvo against the robots comes from economists Daron Acemoglu, Andrea Manera, and Pascual Restrepo. In a recent National Bureau of Economic Research paper entitled “Does the US Tax Code Favor Automation?,” they argue that taxes are higher on labor than on capital equipment, causing companies to invest too much in machines and not enough in manpower. The authors claim that this misallocation of resources is responsible for lower wages and lower employment levels; to remedy it, they advocate taxing automation and cutting income and payroll taxes. This, they argue, could raise employment by about 4%. That’s an astonishing number, representing over 5 million new workers. Is it worth considering?