Proposals to tax robots, while well-intentioned, may not effectively address the inequality and social consequences brought about by automation.
Ken works full-time driving a massive harvester for a farmer named Luke. Ken’s job contributes through taxes and social security payments, which support government initiatives and welfare services for his community. However, Luke is preparing to replace Ken with Nexus, a robot capable of operating longer hours, in all weather conditions, without needing breaks, time off, or health coverage.
Bill Gates has suggested that in order to address the inequality and social challenges posed by automation, robots like Nexus should either be taxed like workers or trigger a tax on employers who replace human labor with machines. The revenue from this so-called “robot tax” could be used to fund initiatives such as a universal basic income (UBI). This idea, one of several variations of the UBI concept, reveals deeper issues within modern capitalism and the values often overlooked by wealthy societies.
The Flaws in a ‘Robot Tax’
The core purpose of automation is that machines like Nexus don’t require employment contracts. They also don’t earn a wage that could be taxed. To simulate taxation, authorities would need to use Ken’s previous salary as a benchmark and charge Luke accordingly. However, this leads to several problems.
First, Ken’s income would have fluctuated over time, but this hypothetical benchmark salary is static unless adjusted arbitrarily—inviting disputes between tax authorities and businesses. Second, as technology progresses, more machines will emerge without human predecessors, leaving no basis for calculating tax. Third, there’s a conceptual inconsistency: Nexus is taxed, but the harvester it operates isn’t—even though the harvester itself replaced far more manual labor. The only argument in favor of taxing Nexus is its increased autonomy.
Is Nexus Truly Autonomous?
How autonomous is Nexus, really, compared to the harvester? Unless Nexus gains consciousness, either independently or via programming, its autonomy remains limited. Only if Nexus were to develop awareness, like the fictional Nexus-6 androids in Blade Runner, could it be treated as distinct from the machine it operates. At that point, Nexus would deserve equal treatment with Ken—including pay, benefits, and rights.
But as long as robots lack consciousness, taxing them like humans remains a legal and ethical stretch. If taxing robotic income proves too complicated or prone to conflict and tax avoidance, perhaps a better idea is to impose a one-time sales tax on Luke when he acquires Nexus. This, at least, is logistically feasible.
Rethinking the Automation Economy
Gates has endorsed this one-time tax as a compromise, seeing it as a way to discourage rapid automation and cushion the blow to displaced workers. But this tax would encourage manufacturers to integrate AI invisibly within equipment. Over time, Nexus would be built directly into the harvester, making the robotic component indistinguishable from the rest of the machinery—and thus untaxable.
This leaves policymakers with two choices: abandon the robot tax or broaden it into a tax on all capital goods. But that would be deeply unpopular, as it risks slowing productivity growth and hurting national competitiveness.
For centuries, capitalist systems have struggled to clearly define the boundaries between property and capital—between wealth, rents, and profits. This same confusion complicates designing a functional wealth tax and clouds any attempt to define what counts as a “robot” for taxation purposes.
A Simpler and More Equitable Solution
Rather than complicate the current system with new, ambiguous taxes, there’s a more straightforward option: a universal basic dividend (UBD), paid out from capital income. For instance, every time a company goes public, a portion of its shares could be allocated to a public trust. This trust would generate ongoing revenue distributed equally among citizens.
In this model, society collectively owns a share in all corporations. As automation drives up productivity and profits, everyone benefits through the UBD. No new taxes would be needed, no changes to the existing welfare system, and the distribution of wealth would become more equitable.
This rising tide of corporate earnings would, in turn, boost public revenues and make welfare funding more sustainable. Combined with improved labor protections and fair wages, such a system could revitalize the dream of broadly shared prosperity.
The early industrial revolutions relied on individual inventors and entrepreneurs claiming exclusive rights to income generated by their inventions. Today’s tech transformation, however, is rooted in the increasingly collective creation of capital. The logical policy response is to collectively share in the financial returns from this capital.
In conclusion, rather than tax robots or penalize automation, we should ensure everyone gets a slice of the profits. By placing a small portion of Luke’s farm equity into a public trust, citizens can benefit from his gains. At the same time, those like Ken should be guaranteed either unemployment benefits, a new job funded by the community, or opportunities for retraining—while working conditions for current employees are made more secure and dignified.
