Taxing Robots: Solution or Fantasy?

Robots—cold-hearted machines (except for occasional CPU overheating)—promise either to save the global economy or to doom it to a dystopian abyss. If you're wondering whether these steel and silicon blocks should pay taxes, you're not alone.

In recent years, the so-called “Robot Tax” has become a widely debated topic in academic circles and political discussions. And it's easy to see why: there's something ironically amusing about the idea of sending a robot to stand in line at the IRS.

An Idea Launched by a Billionaire, Embraced by Academics

The debate over taxing robots gained momentum after a 2017 statement by Bill Gates, who suggested taxing robots to compensate for the loss of human jobs.

According to Gates, if a robot replaces a human worker, it should contribute to public finances just as that worker did. Unsurprisingly, his words sparked an intense debate, bringing the topic into mainstream discussions.

Professor Xavier Oberson, author of Taxing Robots: Helping the Economy to Adapt to the Use of Artificial Intelligence (Edward Elgar Publishing, 2019), argues that for such a tax to be effective, it is crucial to define precisely what qualifies as a robot.

Oberson proposes a broad definition, including not only physical machines but also software and algorithms, to prevent companies from exploiting legal loopholes and technical ambiguities.

Defining a Robot: Between Philosophy and Tax Law

Definition is a key issue. What exactly is a robot?

• A mechanical arm assembling car panels in Detroit? ✅

• An algorithm suggesting a cooking course ad after reading an article about sushi? Also a robot, according to some. ✅

A too-narrow definition could limit what qualifies as a robot, encouraging companies to rebrand their machines to avoid taxation.

It's like saying:"It's not a swimming pool, it's just a big bathtub without running water."

Christina Dimitropoulou, in Robot Taxation: A Normative Tax Policy Analysis (2023), highlights the importance of avoiding ambiguous definitions, which could lead to widespread tax avoidance strategies.

Possible Approaches: The Robot Usage Tax & Other Creative Solutions

One proposal is the “robot usage tax”, a tax calculated based on the salary a human worker would have earned for the same job.

A strange idea, perhaps, but one that might have amused Jean-Baptiste Colbert, finance minister under King Louis XIV—because nothing is more French than taxing even a simulation of labor.

Oberson argues that this tax could neutralize the current fiscal advantage enjoyed by companies that heavily invest in automation.

If a company replaces 20 human workers with 20 robotic arms, the tax should, in some way, offset the lost fiscal contributions of those unemployed workers.

Another option is the “automation tax”, based on:

• The proportion of robots vs. human workers

• The level of investment in automation assets

This measure would target the economic benefits of automation, aiming to compensate for potential job losses.

However, many economists oppose this idea, fearing it could discourage investments in technological innovation.

Obstacles & Challenges to the Robot Tax

Miriam Pontillo, in an article for the Rivista di Diritto Tributario (2022), highlights a major issue:

💡 How do you define the tax liability of a robot?💡 Can a machine, no matter how intelligent, have legal personality?💡 If a robot “evades taxes,” who is responsible?

This complexity has led many to argue that, instead of inventing new taxes, we should adjust the existing tax system to create a fairer balance between income from labor and capital income, considering the growing role of automation.

Balancing Innovation and Social Justice

Ultimately, a fair and neutral tax system should:

• Avoid favoring automation over human labor

• Not hinder technological progress

Striking this delicate balance is crucial to ensuring a sustainable future where the benefits of automation are shared equitably and contribute to social well-being.

As Oberson rightly concludes, taxing robots requires a nuanced approach and a flexible regulatory framework—one that adapts to rapid technological changes while maintaining principles of equity, neutrality, and international cooperation.

Because if we must share the world with robots, they might as well help pay the bills, right?

And You?

What do you think?

💭 Should robots contribute to collective well-being through taxes, or should they be free to optimize corporate profits without limits?

The debate is ongoing, and opinions vary widely. But one thing is clear: the fiscal future of our societies has never been more fascinating.

Key Contributions on Robot Taxation

Xavier Oberson:

• Taxing Robots: Helping the Economy to Adapt to the Use of Artificial Intelligence (2019)

• Taxing Artificial Intelligence (2024): An updated edition of his previous work, addressing AI taxation in response to labor market transformations.

Álvaro Falcón Pulido:

• Tax and Robotics (2023): Discusses whether robots should be taxed and how financial law should adapt to this new reality.

Christina Dimitropoulou:

• Robot Taxation: A Normative Tax Policy Analysis (2023): Analyzes how fiscal policy should handle the impact of automation on jobs and tax revenues, proposing possible taxation models.

Miriam Pontillo:

• Robot Tax: Possible Taxation Models Between Support and Opposition (2022): Discusses different taxation proposals and analyzes both supporting and opposing views. (Rivista di Diritto Tributario).

Elias Moser:

• Against Robot Taxes: Scrutinizing the Moral Reasons for the Preservation of Work (2021): Critically examines the ethical arguments for preserving human labor by taxing automation (Springer Link).