I am currently writing a chapter about a basic universal income and am considering different financing methods. My personal favourite would be the introduction of a land value tax, but I want to compare more taxes that could be used for financing a UBI.
Businesses would be taxed based on the degree of their automation that replaces human workers. The more humans they replace with automation, the more taxes they would pay.
- Buffers the social costs of automation in a rather targeted way.
- The common good of technology would be leveraged to finance the common good of a UBI. This is philosophically coherent.
- May discourage automation. It can be argued that fast automation will quickly replace bad jobs, which would be a good thing. On the other hand, automation will also inevitable eliminate many good jobs that people actually want to work in.
- The degree of automation might be very hard to measure. Automation is also heavily used by individuals for personal use: Washing machines, dish washers, computers, and soon robots. So, the automation tax would be restricted to businesses who use automation for a profit motive. Anyway, it’s hard to define how automation relates to “equivalent” human work, because the amount of work a human can do also depends on the degree of automation applied by that human. The required estimation of automation might be a bureaucratic nightmare and quite arbitrary in many respect creating significant imbalances in the economy
- Disincentivizing automation might also decrease economic growth
- Introducing just another new tax makes the tax system more complicated.
- Businesses who depend on a high degree of automation might consider outsourcing their activities to countries without automation tax.
- It would tax the most efficient companies, so it would punish moving towards higher efficiency. Not a good idea.
Higher Income Tax
- It’s a tax that already exists, so simply increasing it is something that may not be politically popular, but it would be quite feasible.
- Companies already pay taxes on their profits, so profits they gain from increased automation are already taxed. It may be better to adjust the taxes on company incomes rather than to tax automation specifically.
- Increases in income taxes are notoriously unpopular.
- Income taxes create general economic disincentives which are bad for the economy.
Overall my impression is that higher income taxes are less problematic than automation taxes. What do you think about this issue?