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Bill Gates was wrong: Why we won’t need to tax robots

While no one can deny the genius of the founder of Microsoft, being one of the richest men in the world doesn’t automatically mean your ideas are golden.

Bill Gates recently suggested that, in the future, governments should start taxing robots and their use in automation. While coming from a supportive place – to counter robot uptake across industries and the resulting loss of jobs for workers – the suggestion has a few issues that don’t hold weight under the microscope.

Less than 5 percent of all jobs can be fully automated by robotics, according to the McKinsey Global Institute’s 2017 Automation report. Rather than replacing people, automation has the potential to dramatically improve productivity, increasing by 0.8 to 1.4 percent annually, which leaves companies room to create jobs not remove them.

Less than 5 per cent of all jobs can be fully automated by robotics.

So why does Mr. Gates think robots will replace jobs and must be taxed accordingly? More importantly, why is he wrong?

Why governments won’t need to tax robots 

Mr. Gates claims that as robots replace workers, the taxed income governments would normally receive from employee wages would disappear, leaving a growing deficit as the number of robots replacing jobs increases globally he explains in an interview with digital news outlet Quartz. 

“Right now, the human worker who does, say, $50,000 worth of work in a factory, that income is taxed and you get income tax, social security tax, all those things. If a robot comes in to do the same thing, you’d think that we’d tax the robot at a similar level,” Mr. Gates said.

While taxing robots at a similar level to the people they replace may seem like the logical answer to this automation trend, there’s a key issue that is overlooked which invalidates Gates’ assumption: Robots don’t replace jobs, they create them.

Robots help create jobs, not take them away.

Why more robots mean more jobs

By adopting automation and robots, the productivity gained through their use will create new jobs, according to the International Federation of Robotics (IFR). There is already evidence of this in the US automotive industry, says IFR. Between 2010 and 2015, there were more than 60,000 industrial robots installed, yet during this same period, the number of employees increased by over 200,000, claims the IFR, a trend that can be seen in other developed nations.

On top of this, while fears that robots will replace jobs are unfounded, some suggest that imposing a robot tax on companies that use them will instead harm productivity and growth, limiting businesses in their ability to invest in future growth and opportunities.

Would a robot tax have a negative impact on business growth?

In developed countries, growth has stagnated, according to a Bloomberg article published in February 2017. The article argues that the adoption of new technology is too slow, rather than too fast. We need more robots, not fewer, in order to find new ways to increase growth and productivity, and Bloomberg claims taxing robots will make it harder to do so.

Robotic automation has the potential to improve productivity and increase profits.

To counter the relevant question of how governments will run with fewer taxable employees, Joe Gemma, President of IFR, suggests that it’s profits, rather than robots, that need to be taxed. This will allow companies to remain competitive while implementing technology for automation.

Robotic automation has the potential to improve productivity and increase profits. By replacing repetitive and dangerous tasks, their use in the workforce leads to the creation of safer, higher-skilled and better-paying jobs.

At Design Energy, our customised automation solutions can be tailored to any industrial or manufacturing requirements. For more information about how robotics and automation can transform your workplace for the better, reach out to our team today.

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