Does the US Tax Code Favor Automation?

Abstract

We argue that the US tax system is biased against labor and in favor of capital and has become more so in recent years. As a consequence, it has promoted inefficiently high levels of automation. Moving from the US tax system in the 2010s to optimal taxation of capital and labor would raise employment by 4.02% and the labor share by 0.78 percentage points, and restore the optimal level of automation. If moving to optimal taxes is infeasible, more modest reforms can still increase employment by 1.14-1.96%, but in this case efficiency can be increased by imposing an additional automation tax to reduce the equilibrium level of automation. This is because marginal automated tasks do not bring much productivity gains but displace workers, reducing employment below its socially optimal level. We additionally show that reducing labor taxes or combining lower capital taxes with automation taxes can increase employment much more than the uniform reductions in capital taxes enacted between 2000 and 2018.

Artificial Intelligence, Globalization, and Strategies for Economic Development

“…Stiglitz (2014) shows that this encourages excessive automation in high-income countries. Acemoglu et al (2020) observe that tax policies that favor capital over labor also distort the direction of progress towards saving labor.…”

Aging and automation in economies with search frictions

“…Automation and robotics are …elds of arti…cial intelligence (AI). 2 While AI and robots, in particular, emerged in large-scale mass manufacturing, they are now spreading to more and more application areas. 3 One of them is Healthcare Informatics, which seems to be advancing in great leaps and bounds.…”

“…For example, in China, the share of the population aged 65 years or over has continuously increased in recent years and reached 11.9 percent in 2019. 2 The economic use of AI can be divided into …ve categories: Deep Learning, Robotization, Dematerialization, Gig economy, and Autonomous Driving (see Wisskirchen et al 2017) 3 The …rst industrial robot was installed in a General Motors automobile factory in New Jersey (Brynjolfsson and McAfee 2016).…”

“…Thus, we set = 10% and we let the government budget constraint (24) determine the subsidy t : 15 The resulting subsidy is presented in Subsection A. 2…”

Against robot taxes: scrutinizing the moral reasons for the preservation of work

“…-Eliminating tax privileges: to "disallow the respective corporate income tax deductions for capital investment that give rise to the automation tax benefit" (p. 169) -Taxing replacement: an "additional Federal tax to the extent the Treasury department determined the lay-offs were due to automation" (p. 170) -Subsidizing labor: "tax preferences for firms that employ human workers for each category of tax benefit" (p. 171) -Taxing capital: to "significantly increase the corporate tax rate" (p. 172) One normative claim that lays at the heart of Abbot's and Bogenschneider's defense of RT is based on the observation that, on the one end, labor is highly taxed whereas, on the other, capital is usually not [16]. Their normative claim for RT, therefore, relies on its presumed objective to neutralize the "competitive advantage" of robots over humans.…”