Would a tax on AI save society?

We may not be on the verge of a robot apocalypse, or at least not quite yet, but the new age of AI and the robotic boom has been a long time coming. As the world’s mechanical overhaul becomes an increasingly accepted concept, it is vital to consider what this means for the labour force, the redistribution of wealth and tax laws, writes Stuart Airey, Senior Accountant at Accounts and Legal.

The introduction of machines capable of independent thought dates back to the late 1930s, 40s and early 50s. Despite Alan Turing’s “Turing test” proposal in 1950, his work culminated in his famous deciphering of the Enigma code in 1939 and the subsequent invention of the  programmable digital computers in the 40s.

Automation isn’t new, not by any stretch.

In the late 16th century, a British inventor by the name of William Lee founded the stocking frame - a creation that would completely revolutionise the clothing industry. Instead of laying 100 stitches per minute by hand, workers increased their productivity tenfold with Lee’s machine, averaging 1,000 stitches a minute.

The same happened with the printing press - an invention which modernised each society it touched in the 1500s was, itself, made redundant by more efficient printing machines.

This is a normal process aligned with human evolution and access to information, seen time and time again when one looks back through centuries of humankind. As technology improves, it reduces the amount of labour required to produce a certain number of goods.

The big issue, however, is the phenomenon of automation in times gone by has not produced extreme unemployment. The difference now is the strong possibility technology will reach such sophistication that there will not be anything left for humans to do.

Granted, the current AI rhetoric being batted about is fuelled predominately by hype, but that is not to say it is without substance.

Look no further than Waymo’s self-driving taxis, currently being tested on the streets of Phoenix, Arizona. Based on startups like Waymo, it’s fair to believe bigger breakthroughs are on the horizon.

The issue caused by said breakthroughs, however, is that rather than transforming the way in which we work, technology might begin to eliminate it. In essence, instead of making it possible to create more wealth with less labour, automation might make it possible to create more wealth without any labour.

Thus, cue the lengthy list of potentially troublesome woes.

Creating wealth without labour

Money won’t ever grow on trees, but it could be printed by AI if labour ceases to exist and the money keeps coming in regardless.

The initial reaction to such a not-so-distant pot of gold is generally a positive one, that is, until you poke it from a few more specific angles.

The debate really boils down to who holds this new found wealth.

Under capitalism, wages are how workers receive a portion of what they produce. That portion has always been small, relative to the rewards that flow to the owners of capital. And over the past several decades, it’s gotten smaller: the share of the national income that goes to wages has been steadily shrinking, while the share that goes to capital has been growing.

Technology has made workers more productive, but the profits have trickled up, not down.

Productivity increased by 80.4% between 1973 and 2011, but the real hourly compensation of the median worker went up by only 10.7%.

As bad as this is, mass automation threatens to make it much worse. If you think inequality is a problem now, imagine a world where the rich can get richer all by themselves.

If the existing capital structure can shrug off its association with labour, this will not just signal the end of the working world, but will be a cause of death for the wage, too. In the absence of a wage, workers lose their only access to wealth and their means for survival.

So, what solutions are there to protecting the majority of society from this new wave of robotic capitalism?

Put a tax on AI

A hypothetical robot tax isn’t exactly groundbreaking. It was, in fact, shoved into the public spotlight by Bill Gates last year when he proposed a new tax take effect on robots in the US, where income tax makes up 80% of the government's tax revenue.

In the UK, income tax and National Insurance Contributions (NICs) represent almost half of all tax revenue at 44%, and while it’s not on the same scale as the US, losing out on this revenue would create a £303.5bn hole in the government’s receipts.

Based on this loss of revenue, a robot tax should consider how the government could deal with rising inequality, should automation dispel the labour force. It would be natural to consider a more progressive income tax and a “basic income”.

However, such ideas do not have widespread popular support.

When taxes on high incomes are raised, usually in wartime, it turns out to be only temporary. Ultimately, it seems natural to most people that taxing successful people to benefit unsuccessful people is demeaning to the latter, and, in some cases, the recipients of the handout share the demeaning burden.

Therefore, taxes could be reframed as a remedy for income inequality induced by robotisation. It may be more politically acceptable, and thus sustainable, to tax the robots rather than just high-income individuals.

And while this would not tax individual human success, as income taxes do, it might in fact imply somewhat higher taxes on higher incomes, if high incomes are earned in activities that involve replacing humans with robots.

Further to that, revenue could be targeted towards wage insurance, which would help people replaced by new technology make the transition to a different career, if such an opportunity has not been wiped out entirely by then.

Ban the use of AI

By now it’s almost common knowledge Elon Musk is kept awake at night by the thought of killer robots, and while the Pandora’s box that fills his nightmares seems something from a cliché sci-fi flick, his call to ban the use of AI in developing deadly weapons does have a common fear at its core.

In a way, it’s the same fear that drove the Luddites of 19th century Britain to smash every weaving machine which lay in their path. Automation of standard labour practices struck worry into the hearts of many and they lashed out in protest, doing all in their power to stop the unrelenting march of technology.

Should the 21st century mark the rise of a new Luddite group, leaving a path of robotic destruction in their wake?

No, it shouldn’t.

For now, it’s disruptive technology that is transforming life, whether that be through the 3D printing of prosthetic limbs, improving the current generation’s carbon footprint, or using cloud accounting software to help entrepreneurs compete in traditionally monopolised markets.

Equal ownership of AI

According to a recent Oxfam report, the world’s eight wealthiest individuals own the same amount of wealth as the 3.6 billion people who comprise the poorer half of the world’s population.

What would happen if the same handful of wealthy individuals had sole access to AI, the same way the Rockefeller Group own companies at the forefront of almost every US market?

From the UK’s perspective, the most worrying consequence would be the fate of its 5.5 million SMEs. Representing the country’s most significant contributor to the economy, as well as accounting for 49% of Britain's’ employment, putting access to AI in the hands of a wealthy few would render millions of British SMEs and their employees redundant.

Dominating robotic capital would enable the highest echelons of the business world to completely secede from society, including all of the startups and small businesses who are currently vying for their opportunity to mix it with the big hitters.

As it stands, even the most-quarantined luxury bunker or private island is tethered to the outside world, as long as capital relies on labour to produce the goods.

However, total ownership of AI and subsequent mass automation would make it possible for this handful of wealthy individuals to cut all ties with the rest of the world.

Equipped with an infinite supply of workerless wealth, they could stow away in a gated tax haven, leaving the rest to effectively rot.