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Would de Blasio’s ‘Robot Tax’ Work to Regulate Automation?

Regulate Automation

Widespread automatic and advanced robotics are changing the world. While they offer many benefits, including increased efficiency, lower operating costs and the overall improvement of workforce safety, they also bring some major complications to the table. For each new automated system or robotic implement that gets adopted, more workers are out of a job.

It’s true that many of these systems both eliminate legacy jobs and introduce new ones. But the scale of potential displacement is cause for concern. New York’s Mayor and Democratic presidential hopeful Bill de Blasio has a proposed plan.

In an interview with FOX News, de Blasio explained his vision: “If a company is gonna put thousands of people out of work, they should bear responsibility for making sure that those folks get a new job.”

A whopping “thirty-six million jobs” could become obsolete as a result of these technologies “as early as 2030.” That’s going to leave a lot of people without work and nowhere to turn for reliable income.

De Blasio has created a “robot tax” which would require corporations to properly compensate workers laid off as a result of the technology’s adoption. It will work in a similar fashion as the other state tax programs, including sales and cloud computing taxes, contractor taxes, luxury item fees and more.

The tax will “protect working people whose livelihoods are threatened by the unchecked growth of automation,” simply by requiring companies to pay the equivalent of five years’ worth of payroll taxes “upfront” for each worker that sees their job eliminated.

Where Does the Tax Money Go?

The tax revenue collected as a result would not go to workers directly, but instead will be used to establish new union jobs in fields such as green energy, health care and education. These are all mainstays in the current landscape, which amounts to job stability for those affected.

More importantly, any of the workers who lose their jobs to automation and robotics will go “to the front of the line for these new positions.” Effectively, the idea is to give them an entirely new opportunity where they can thrive, hopefully much longer than they did at their previous job.

That’s not all de Blasio’s tax will do, however. His plan also calls for the creation of a new agency called the Federal Automation and Worker Protection Agency (FAWPA). It would be explicitly tasked with regulating the adoption of automation and overseeing its general impact. One of the things the agency would do is distribute and audit permits for companies that are implementing automation on a larger scale.

The plan will also supposedly close loopholes that companies leverage to save hundreds of billions of dollars through tax deductions. They can spend billions investing in automation and then take advantage of loopholes, all while destroying their employees’ jobs and lives.

The tax sounds promising, and it has been discussed by other proponents in the past, including Bill Gates. But could it be truly effective, and will it work to support those who face displacement at the mechanical hands of modern technologies?

Is a Robot Tax Practical? Will It Help?

The issue is more complex than merely “jobs going away” and being replaced by automation. One potential problem with de Blasio’s plan is that he also supports a $15 minimum wage. By itself, the pay increase is beneficial to hourly workers and minimum wage employees. But it also puts added pressure on many of the companies that would be affected by his automation plan.

Why? Because many of those companies would spring for increased automation and robotics in the wake of the wage increase. The greater issue is not the policies themselves, or the benefits and issues they introduce, but the greater impact it will have on the local economy.

Simply put, higher wages tend to accelerate an enterprise toward automation. Payroll processing firm ADP notes, for instance, that “federal and state-mandated minimum wage hikes could accelerate the migration toward replacing low-skilled workers with automation.” 

It just so happens that many of those minimum wage opportunities — including cashiers, service representatives and more — are some of the easiest and most lucrative jobs to replace with automation. That’s exactly why Wendy’s introduced automated kiosks for food orders and then posted cost savings as a result.

This creates a cycle where more jobs are going away directly because of the policies that were put in place to improve them. Therefore, the robot tax could help, but it may not be enough to stem the flow of jobs and opportunities being phased out. This would ultimately exacerbate the problem even more, essentially rendering any gains from the tax negligible.

All in all, the robot tax is a rather unique and perhaps even effective idea on its own. But the problem is that it doesn’t exist in a vacuum. Additional policies and current events must be taken into account before something like this can be put in place. 

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