Paul L. Caron

Tuesday, January 25, 2022

The Robotic Revolution: A Tax Policy Collision Course

Kathryn Kisska-Schulze (Clemson) & Rodney P. Mock (California Polytechnic State University), The Robotic Revolution: A Tax Policy Collision Course, 93 Temp. L. Rev. 301 (2021): 

Media projections depict that robotics, process automation, and artificial intelligence threaten human workforce sustainability. Two oft cited studies forecast that technological innovation could jeopardize more than one third of the U.S. workforce. Significant worker displacement would devastate federal funding that is heavily reliant on individual income tax revenue and payroll taxes. Concerns of mass joblessness have led Bill Gates and others to propose a robot tax, with some suggesting a complete reworking of the Internal Revenue Code to address looming predictions.

While these ideas are critical to the robot immersion dialogue, they are largely premised on fear and the proposition that human labor should be protected. As history supports, automation has always threatened the human workforce, which has demonstrated a great propensity for adaptation. As resisting the tractor for fear of replacing farmers’ grit would have been senseless, it is now imprudent to tax innovation for fear of automation substitution. From its inception, the U.S. Constitution has protected innovation and intellectual property. Similarly, the Internal Revenue Code serves to incentivize research and development. Taxing robots would disrupt our nation’s deeply rooted tax policies.

As a matter of astute policy, this Article advances that Congress should not impose a robot tax.

This Article is the first to conduct a significant literature review of the current proposals to tax robots, ultimately taking a contrarian view. It examines mankind’s historical connection to labor amid fears of automation substitution and proposes that implementing fear based tax policy based on job displacement projections is unsound. In addition, this Article advances that “robot” cannot be defined for tax purposes because its characteristics are not clearly delineated. Finally, it concludes that the proper strategic course for U.S. tax policy is to encourage innovative robotics, rather than discourage it.

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